By: Sean Wynne
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The use of Electronic Signatures in contracts is becoming more and more popular. Programs such as Adobe DC or DocuSign make the tedious job of signing off contracts much easier. However, many people may not realise that Electronic Signatures may not be used in certain situations.
The Alienation of Land Act requires that a Sale Agreement for immovable Property must be reduced to writing and signed by both parties. Thus, it is not possible to form a binding contract to purchase Property verbally. The Alienation of Land Act certainly did not envision a time when Contracts for the sale of land could be signed digitally.
The Electronic Communications and Transactions Act gives effect to contracts signed digitally. However, there are certain exceptions to this rule. These are:
- Contracts for the Sale of Immovable Property.
- Long Term leases of 10 years or more.
- Wills and other testamentary writings.
- Bills of Exchange (Cheques).
As such, there is not validity given to any of the above 4 documents signed with an electronic signature.
The recent judgment handed down by the High Court in Borcherds v Duxbury has given the impression that electronic signatures are allowed in contracts for the Sale of Immovable Property. Many Legal Practitioners, including myself, respectfully disagree with the judgment. For one, we feel that the court did not fully consider the provisions of ECTA and the specific exclusion on using electronic signatures on Offers to Purchase. It is quite possible that another court would come to a different conclusion on the same or similar set of facts.
It is further important to note that electronic signatures may not be used to sign Transfer Documents. When a Seller or Buyer signs transfer documents with a Conveyancer, they will be required to sign Affidavits attesting to some important facts regarding the Transfer. As there currently exists no way to sign affidavits digitally, these must be signed with a wet ink signature in front of a commissioner of oaths. Further, a Seller is required to sign a Power of Attorney giving the Conveyancer the power to transfer the Property to the Purchaser. The Deeds Office will not accept a Power of Attorney signed digitally.
With the above in mind, make sure that you as a Seller or Purchaser of Property do not sign your Offer electronically. Offers may still be scanned and emailed, but must be signed by means of a wet ink signature to be considered valid in law.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)