Conversations and agreements – when are they binding?

Conversations and agreements – when are they binding?

Introduction

A major cause of disputes occurs over the content of agreements. Sometimes these disputes are a result of poorly drafted contracts; content and deliverables not being adequately described; or as a result of variations to the original contract. Another source of dispute is verbal contracts and conversations where the parties dispute the content of what was agreed upon.

Both verbal and written contracts are, in general, legally binding. However, sometimes writing is unavoidable and is a formality for the contract to be valid, for example: the sale of immovable property, antenuptial contracts, wills and executory donations. Along with the preceding list, all documents that have to be submitted to and registered with the Deeds Office must also be set out in writing.

Written contracts have various advantages, among others, they:

  • ensure that both parties are fully aware of the contents of their agreement;
  • create transparency between the parties;
  • create and maintain trust between parties;
  • can stipulate formalities that must be met for validity; and
  • serve to avoid unnecessary disputes.

Electronic communication

The Electronic Communications and Transactions Act 25 of 2002 (“ECTA“) recognises electronic messages (or “data messages“) as the functional equivalent of writing, meaning that data messages have the same legal validity as content written on paper. This results in any formality requiring writing to be met when the information is in the form of a data message. ECTA, however, imposes a requirement of accessibility to accompany data messages by requiring data messages to be easily accessible to the parties thereto.

The validity of electronic messages was confirmed by the Supreme Court of Appeal (“SCA“) in November 2014 in the case of Spring Forest Trading v Wilberry (Pty) Ltd. The court held that variations to an agreement between the parties made via email were binding – the arguments put forth were that the variation to the agreement was required to be made in writing and signed by both parties in order for it to be valid and that this requirement had not been met because the variations were only discussed and agreed to via email. The court stated that the email signatures at the bottom of the emails amount to signatures and that the email messages constituted writing in terms of ECTA.

Conclusion

Written contracts are always recommended. The rationale being that oral agreements offer no objective or clear record of the details of the agreement and the specific terms are often difficult to establish when a dispute arises. Well drafted agreements should include useful information and guidance to the parties to ensure a fair and smooth resolution of disputes or disagreements. The guidance information should address when parties may cancel the agreement, what constitutes breach and how the breach should be remedied.

Written agreements should also set out that any changes to the agreement are not valid if they are not in writing (and signed by both parties) – which prevents disputes over any amended terms of the agreement. This also prevents quarrels of a “he said, she said” nature as everything has been recorded. As set out above, this can be done via email or other electronic messages, including Whatsapp, for example, however, the name of the sender must be signed at the end of the message for it to be valid.

It is important to understand that following the abovementioned judgment, parties to a contract should specifically refer to an “advanced electronic signature” – which is a special signature provided for in ECTA – being required to amend the agreement if the intention is for the usual email type correspondence not to effect an amendment to the agreement.

Remember, you could be bound to a contract where you have willingly signed it even if you have not yet read it.

Important take-aways

  • electronic communication is legally binding and is the equivalent of writing;
  • some agreements can only be altered if the variation is in writing and signed by both parties;
  • some agreements must be in writing and signed (and sometimes commissioned or notarised) in order to be valid and binding; and
  • oral agreements are binding (but not advised!).
The dos and don’ts of recording conversations

The dos and don’ts of recording conversations

There are several reasons why a business may want to record its interactions / conversations with customers: improving customer service; ensuring that employees always treat customers in the best possible way; ensuring easy customer follow-up and resolution of disputes; demonstrating accountability to customers; and aiding reliable note-taking.

Several businesses may not, however, realise these benefits as they are unsure of the legality and legal parameters of recording conversations. To clear up grey areas and enable you to grow and improve your business using all tools available, we have set out the basics of recording conversations in South Africa.

Am I (or is my business) allowed to record conversations with customers?

While, in terms of the Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002 (“RICA“), the general rule is that no person may record a conversation without consent, the Act does set out certain exceptions to this rule. The exceptions include (and you can therefore record a conversation) where:

  • you are a party to the conversation (“single-party consent”);
  • you have the prior written consent of at least one of the parties to the conversation; or
  • the conversation relates to, or occurs in the course of, the carrying on of your business (“the business exception”).

It is important to note that the business exception is subject to further requirements in terms of RICA.

As a side note, certain businesses (specifically those in the financial services and intermediary industry) are legally required to record certain conversations with customers and to maintain such recordings for a statutory minimum period. This is however beyond the scope of this article.

Consent to record

As stated above, consent of at least one party to the communication is required when recording a conversation. This rule does not apply where the recorder is also a party to the conversation.

However, where a third party is recording the conversation, the third party must obtain informed consent from one of the parties to the conversation in order to legally record the conversation.

Guidelines for recording conversations

  • When recording conversations under the business exception, it is required that you make all reasonable efforts, in advance, to inform all parties that you will be recording conversations. It is good business practice to ensure and be certain that all customers are aware when conversations are recorded.
  • Use reliable technology to record and store recordings of conversations – you want to make sure that your customers’ (and your business’s) information is protected! In this regard, ensure that any recordings and storage thereof comply with all relevant laws (including, for example, the Protection of Personal Information Act 4 of 2013)
  • Maintain an effective storage system so that you can make the most use of your recorded conversations in developing your business

The article is serves only as a basic introduction to the topic of recording conversations and legal advice should be sought in relation to specific circumstances.