WhatsApp: A unique, convenient method of cancelling a contract?

WhatsApp: A unique, convenient method of cancelling a contract?
13 Oct 2017

The rapid rise in modern technology, the advent of smartphones as well as the increased popularity of social media and instant messaging services such as WhatsApp, have resulted in easier, effective, lightning quick communication between parties in addition to providing immediate access to information.

In South Africa and indeed globally, WhatsApp is a highly utilized instant messaging platform resulting in tremendous amounts of data being exchanged between parties on a daily basis. Consequently, it has now become common place for negotiations between parties to take place almost entirely over instant messaging.

In light of the above, it is becoming increasingly popular for parties to cancel agreements, or at the very least, evidence their intention not to be bound to an agreement, by virtue of the use of WhatsApp messages.

The question then arises as to whether these messages are recognized in our law as a legitimate means of cancelling a contract.

In this regard one needs to turn to the written agreement signed between the parties. Written contracts in South African law contain a number of “boiler-plate clauses” i.e standard clauses that are incorporated into most contracts.

One of these clauses is a non-variation clause. This clause would essentially dictate that no variation or consensual cancellation of a contract entered into will be of any legal force or effect unless it is reduced to writing and signed by all parties to the agreement. This means that if you wish to cancel an agreement you need to comply with two requirements. Firstly, you need to ensure that you give notice in writing and secondly, you need to ensure that it is signed.

Now then, due to the fact that instant messaging has become a familiar, reliable and instant method of communication would a WhatsApp message then comply with the requirements as envisaged in the non-variation clause?

When attempting to address this issue, one must have regard to the case of Spring Forest Trading 599 CC versus Wilberry (Pty) Ltd trading as Ecowash and Another. In this matter, the Supreme Court of Appeal (SCA) needed to establish whether a contract between two commercial entities was lawfully cancelled via an exchange of emails between the two entities.

In dealing with this matter, the court turned to the provisions of the Electronic Communications and Transactions Act 25 of 2002, which Act contains the relevant legal provisions pertaining to the exchange of electronic communication and in particular, Sections 12 and 13 of the Act.

The court found that the requirement that an agreement be cancelled in writing is satisfied if it is in the form of data messages. An exchange of emails is considered to be an exchange of data messages and accordingly this requirement was met. Insofar as the second requirement that a notice of cancellation must be signed, the court had to consider whether the parties’ names at the bottom of the emails constituted a signature in terms of the Act.

In terms of Section 13 of the Act, where an electronic signature is required by the parties and the parties have not agreed on the type of electronic signature to be used, that requirement is met if:

A method is used to identify the person and to indicate the person’s approval of the information communicated.

Having regard to all the relevant circumstances at the time the method was used, the method was as reliable as far as the purposes for which the information was communicated.

In terms of the act, an electronic signature is defined as “data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature”. The court held that the typed names of the parties at the end of the emails were intended to identify the parties and therefore constituted data that was logically associated with the data in the body of the email correspondence and, accordingly, constituted an electronic signature and thus satisfied the requirement of a signature.

Therefore, it was held that cancellation by way of email correspondence was valid.

The importance of this judgment cannot be overestimated as it has profound implications for commercial transactions and the manner in which agreements are concluded and cancelled.
Can this judgment, you may ask, then be extended to include Whatsapp correspondence and other social media platforms such as Facebook, Twitter and Instagram messages? In this regard, it is debatable whether the signature element of the requirement would be met in these instances. Due to the availability of screenshots however and the fact that one is able to distinguish with relative ease as to when a message has been delivered and seen by the other party, an argument may well be made that this requirement has been met.

A concerning issue however is that the legal fraternity is lagging behind somewhat in meeting the demands of modern society and the manner in which contracts are formulated. Some contracts still do not make provision for notices to be served by email and continue to rely on the antiquated methods of hand delivery and post.

It is thus suggested that provision be made in contracts that notices given in terms of electronic communication be extended to include instant messaging platforms such as WhatsApp. What constitutes electronic communication and notice thereof will need to be succintly outlined in the definitions clause of the agreement in order to ensure clarity and certainty.

Do you think that WhatsApp and social media platforms should be utilised more often with a legal perspective? Or do you still favour a more formal approach?

See also: Electronic communications and legal agreements

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Share


Contract Law articles on GoLegal