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Lecture 3. Electronic Contracts

Essentalia of a Valid Contract


Electronic contracts are only valid if they meet the requirements (essentalia) of contracts. The essentalia for a valid contract under South African law are that there must be a valid offer and acceptance, and consequently a mmeeting of minds or consensus between the contracting parties. Where only one party has contractual capacity, a ‘limping contract’ which can only be enforced against the party with capacity will be formed. The contract must be legal or lawful and be capable of performance; otherwise it will not be enforceable. Generally, there are no prescribed formalities for the conclusion of a contract. However formalities are prescribed for certain contracts such as the sale of land.

The validity of a contract may be affected by misrepresentation, mistake or duress.

The time and place of conclusion of contracts are important because they relate to jurisdiction and applicable Law. Section 22 ECTA provides that the reception theory applies to electronic transactions. ECTA also provides for when data messages are to be considered as sent and received, as follows:

Sending: s23(a) : ‘a data message, must be regarded as having been sent by the originator, when it enters an information system outside the control of the originator or, if the originator and addressee are in the same information system, when it is capable of being retrieved by the addressee’.

Reception: s23(b): ‘a data message must be regarded as having been received by the addressee when the complete data message enters an information system designated or used for that purpose by the addressee and is capable of being retrieved and processed by the addressee’.

These two concepts were in issue Jafta v Ezemvelo KZN Wildlife [2008] JOL 22096 (LC).

ECTA also provides for where a data message is taken to be sent from and received.Section 23(c)provides that adata message must be regarded as having been sent from the originator’s usual place of residence or business and as having been received by the addressee, at the addressee’s usual place of residence or business.

Section 25 provides for the attribution of data messages. A data message is considered to have been sent by the originator if he sent ithimself or it was sent by his authorised agent or an automated system programmed by the originator himself or his authorised agent (unless it can be shown that the automated system did not function properly.)

Section 26(1) provides that the agreement is valid upon receipt of the acceptance and it is not necessary for the addressee to acknowledge receipt.

Recommended Reading

Debbie Collier ‘e-Mail and SMS contracts’ (2008) 16(1) Juta’s Business Law 20-22

Elizabeth Macdonald ‘When is a contract formed by the browse-wrap process?’ (2011) 19(4) International Journal of Law & Information Technology 285-305

Tana Pistorius ‘Click-wrap and web-wrap agreements’ (2004) 16 SA Merc LJ 568

S Snail ‘Electronic contracting in South Africa (e-contracts)’ Cyberlaw@SA III pp 41 – 59