Cancellation of a written contract using email correspondence

by Derick Swart on 26 February 2015
In Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash and Another, the Supreme Court of Appeal ("the SCA") held that it was permissible for a written agreement, which required cancellation to be in writing and signed by the parties, to be cancelled by email.

The facts of the case

The parties to the dispute were Wilberry (Pty) Ltd ("Wilberry") and Spring Forest Trading ("Spring Forest"). They entered into several agreements in terms of which Spring Forest leased from Wilberry its Mobile Dispensing Units for use in its car wash business. The agreements contained clauses providing that the agreements may only be cancelled in writing and signed by the parties.

Spring Forest was no able to meet its rental commitments and the parties met in Durban of 25 February 2013 and agreed to cancel their agreements. The terms of the cancellation were recorded in an email exchange. The names of the parties appeared at the foot of each email.

Spring Forest then entered into an agreement with another entity to conduct the same business. In response Wilberry instituted proceedings in the Durban High Court to interdict Spring Forest from continuing its business on the grounds that this was in breach of their agreements. The interdict was sought pending an application for breach of contract that Wilberry was to institute against Spring Forest within 30 days of the interdict. The high court grant the interdict and Spring Forest appealed to the SCA.

The finding

On appeal the SCA held that the email exchange between the parties met the requirements for the cancellation agreement to be in writing. It also held that the typewritten names of the parties at the foot of the emails constituted electronic signatures as envisaged in s 13(3) of the Electronic Communications and Transactions Act 25 of 2002. The signatures therefore complied with the requirements of the parties for the cancellation agreement to be signed by them. The SCA therefore upheld the appeal by Spring Forest and ordered Wilberry to pay the costs of the appeal.         

Relevance

Clients are advised to be mindful of the fact that they can conclude agreements by email, even in the face of a standard non-variation clause.  Boilerplate non-variation clauses should be reconsidered to prescribe such formalities for amendment as may be appropriate, for instance typewritten agreements with a wet-ink signature.

Read the full judgement: http://www.saflii.org/za/cases/ZASCA/2014/178.html.

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