SIGNING A SALE OF PROPERTY AGREEMENT – IS A QUILL AND INK STILL REQUIRED?

SIGNING A SALE OF PROPERTY AGREEMENT – IS A QUILL AND INK STILL REQUIRED?

If you asked whether you could sign a sale of immovable property agreement electronically, the short answer, up until recently, would have been an emphatic “no”. 

This is so, as the Alienation of Land Act 68 of 1981 (“ALA”) provides that no sale of land will be of any force and effect unless it is contained in a written deed of alienation signed by all the parties. In addition, the case law that has evolved under the ALA has always interpreted “signatures” to mean “wet ink on paper signatures, meaning that your hand has to actually hold a pen or pencil to make a signature on a piece of paper.

Should any of the above formalities not be complied with, it will cause the agreement of sale to be invalid and therefore not binding on the parties.

With the expansion of e-commerce and the growing use of digital technology in the business world, there has been a significant increase in documents being signed electronically. However, it is important to remain cautious before opting to use the various applications available for the electronic signature of documents.

In South Africa, electronic signatures are governed by the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”). ECTA lists the documents where an electronic signature is not sufficient, which includes an agreement for alienation of immovable property as provided for in the ALA.

However, in the most recent case on this topic – Borcherds and Another v Duxbury and Others – the Eastern Cape High Court held that it was acceptable for a signatory to use a mobile phone app, to apply a photo of his actual signature, onto a sale agreement for land.

In this case one of the parties concluded a sale agreement of land on 20 June 2020. The purchasers signed the offer to purchase, in pen and ink, and the document was scanned to the seller who received it on his cellular phone. The seller then, utilizing the DocuSign application, imported images of his actual “wet ink” signature and initials into DocuSign on his phone and then applied these signatures to a digital copy of the sale contract, using the same application. Both parties were aware of this fact and didn’t dispute it.

The purchasers of the immovable property sought to set aside the sale of immovable property agreement on various grounds, one of them being that the agreement was signed by the seller using an application used for electronic signatures of documents. It was submitted that by utilizing DocuSign to sign the contract, the seller had applied an electronic signature to the contract within the meaning of ECTA, and as a result, the contract was of no force and effect as it did not satisfy the requirement of the ALA i.e. that of “wet ink”.

The court considered, amongst others, the following facts in making its decision:

  • The words “sign” and “signed” are not defined in the ALA;
  • The approach of the courts to signatures has always been pragmatic, not formalistic.
  • Whether the method of the signature used fulfils the function of a signature (to authenticate the identity of the signatory) rather than to insist on the form of the signature used.

The court also considered other authority where the main concern with electronic signatures was the possibility of abuse, but in this case, there was no denying that the digital image of a signature was that of the actual signatory, and which was merely a digitized version of the seller’s original handwritten signature and initials.

On the facts the court held that “by affixing their signatures and initials to the contract utilizing the DocuSign application, the signatory signed the contract as envisaged in the ALA with the intention of being bound to the contract as seller.”

The court accordingly held that with regard to the issue of signature, the agreement was valid in terms of the ALA and binding on the parties, and that if that is how the seller chose to apply his actual signature, he was free to do so, given that it was still his actual signature – and not a computer-generated image “intended to be” his signature.

This case has certainly pushed the door slightly ajar when it comes to electronic signatures for sale of immovable property agreements. However, that said, as it was only a single judge judgment in the Eastern Cape High Court (which has not since been appealed to our knowledge), it is not entirely authoritative or binding on any other province or High Court. We expect that this case shall be referred to, relied on, as well as criticized in the years that lie ahead. 

Of course each case has to be tried on its own facts and merits based on the particular circumstances, but until there is absolute certainty on the matter in the form of an amendment to the relevant legislation to specifically cater for signatures of land sale agreements in this manner, or a Supreme Court of Appeal ruling confirming this stance, we strongly advise against signing any agreement for the alienation of land other than by way of the traditional wet ink on paper – be it with via the use of a feathered quill or the more modernized yet basic ballpoint pen.

For more information regarding this article or any related information please check out our website  www.fha.law.za

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Yours in Law

  • On August 25, 2023
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