We accept that an illiterate person can sign a document by way of affixing his thumbprint or by making an X whilst literate people do so in handwriting. The intention in both instances is the same – it not only serves to verify that the content of the document is true, correct and valid, but is binding on the signatory.
As we turn increasingly to the use of technology for all our communication, it is not always possible to use a physical signature. The Electronic Communications and Transactions Act (“ECTA”) makes it possible, and acceptable, to utilise signatures in an electronic format – or electronically.
Just how important a signature in an email is, became apparent when the SCA handed down a judgment in the matter of Global & Local Investments Advisors (Pty) Ltd and Nickolaus Ludick Fouché on 18 March 2020.
Fouché, gave Global a written mandate to act as his agent and invest money with Investec Bank on his behalf. The written mandate stipulated that “All instructions must be sent by fax to 011 486 2XXX or by email to monxxxx@globallocal.co.za with client’s signature.” The money was to be invested in a Corporate Cash Manager account in Fouché’s name.
After fraudsters hacked Fouche’s gmail account, they sent Global three emails, using his authentic email credentials. Ending two of the three emails with the words: “Regards, Nick” and the third “Thanks, Nick”, they instructed Global to transfer amounts to accounts of named third parties at First National Bank (FNB).
Global accordingly paid out a total of R804 000 from Mr Fouché’s account to the unknown third parties.
When Fouché became aware of this, he notified Global that the emails had not been sent by him. He accordingly demanded that Global must make good his loss. Global, in turn refused, arguing that they acted on his instructions in the emails signed by him.
The question before the court was whether:
- the signature giving instructions by email to transfer amounts to the accounts of third parties was the Respondent’s signature or not
- the money was paid in terms of the method agreed in terms of the mandate the Respondent had given the Appellant.
Having found at paragraph [9] of the judgment that a signature forms “a basis to determine authority” and could be “checked for authenticity”, the court had occasion to evaluate the purpose and binding force of signatures through the ages.
It is apparent that the purpose of a signature hasn’t changed over the centuries:
In 1854 the court held in the matter of Van Vuuren v Van Vuuren that the purpose of signing a document “means to authenticate that which stands for or is intended to represent the name of the person who is to authenticate”.
In 1962 in the matter of Sonfred (Pty) Ltd v Papert the court held that the significance of the signature on a document was proof of consent by the signatory to bind himself to the content of the document.
Although an electronic signature is as binding as a handwritten signature provided effect is given to the provisions of s 13(3), the issue before the court did not turn on the validity of the signature but rather on the terms of the agreement:
[14] … In order to be able to resort to s 13(3) of the ECT Act Global would have had to show that in terms of the mandate an electronic signature was required. The word ‘electronic’ is conspicuously absent from the mandate.
Given that the agreement required a signature “in manuscript form, even if transmitted electronically”, it followed that Global could not rely on “the typewritten name ‘Nick’ at the foot of the emails”.
The importance of this judgment is that parties must be sure that there is an agreement in place that an electronic signature shall be acceptable and binding before attempting to rely on such a signature.
