The vast majority of credit application forms are scanned and sent back to the credit provider. More often than not, the original never reaches the credit provider. With work from home being the new normal, people are gravitating towards using electronic signatures that are simply pasted into the document. This may well be acceptable for the credit application form itself, but what happens when that electronic signature is pasted onto a suretyship agreement that is incorporated in the credit application form (or that forms part of the bundle)?
The validity of electronic signatures is regulated by the Electronic Communications and Transactions Act, 2002 (“ECT Act”). There is an important difference between a signature that appears on a credit application form and one that appears on a suretyship (even if they are in the same document). The reason why there is this distinction is for two reasons. Firstly, suretyships are regulated by Section 6 of the General Law Amendment Act, 1956 (“GLA Act”), which provides as follows:
“No contract of suretyship entered into after the commencement of this Act, shall be valid, unless the terms thereof are embodied in a written document signed by or on behalf of the surety…”
Secondly, Section 13(1) of the ECT Act provides that:
“Where the signature of a person is required by law and such law does not specify the type of signature, that requirement in relation to a data message is met only if an advanced electronic signature is used.”
Therefore, section 6 of the GLA Act makes it clear that a signature is required on a suretyship. As envisaged by section 13(1) of the ECT Act, a signature is required “by law”, with the result that the electronic signature only qualifies if it is an “advanced electronic signature”. A typical image/picture signature does not meet this requirement.
An advanced electronic signature is a signature issued by an accredited authority in terms of section 37 of the ECT Act. There are a number of requirements for the issuing of an advanced electronic signature, including the accreditation by a registered issuer of the identity of the person that the signature is issued to. Typically, if you click on these signatures, they will show the accreditation, encryption and other information regarding the signature. It is safe to say that very few people that sign suretyships in the context of a credit application process have been issued with advanced electronic signatures.
Therefore, if you place reliance on suretyships in the ordinary course of your business, it is important that you require an original document signed in traditional manuscript. Relying on either a digital signature, or a scanned suretyship puts you at serious risk that the signature is non-compliant. The problem can be compounded when a credit insurer issues cover based on a requirement that a suretyship is obtained and it then transpires that the suretyship is invalid.
These principles were recently confirmed in the unreported judgment of Massbuild (Pty) Ltd t/a Builders Express, Builders Warehouse and Builders Trade Depot v Tikon Construction CC and another  JOL 48548 (GJ).