Can you cancel a lease via email?

The electronic age is in full swing and with each passing year, more and more businesses rely on digital media as the most effective way of communicating with their clients.

As convenient as that is, the implications where a client cancels a lease agreement via email or casually changes the terms of the agreement in a message can be far reaching.

A tenant could, for example, message you to say:

“My rent will be late. I will now pay you on the 10th, Mandy.”

A simple “Okay” followed by your name could be argued to have changed the rental due date indefinitely. Sound unlikely? Not really, here is why:

The Supreme Court of Appeal decided in Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash where precedent was set as to whether a lease agreement with a non-variation clause could be cancelled through a simple email communication between the parties.

The full Judgement can be found here: https://goo.gl/BRTDLj

The facts of the case

Spring Forest Trading leased mobile dispensing units from Wilberry to use in its business endeavours as a car wash. The lease agreement contained a standard non-variation clause stating that the agreement could only be cancelled if it was reduced to writing and if it was signed by both parties.

As Spring Forest could not meet its rental obligations, it was agreed that the lease should be cancelled as requested for by Spring Forest. The terms of the cancellation were discussed via email with the first names of the parties used as signatures at the end of every email.

The dispute arose when Spring Forest entered into a similar agreement with another party for the same business purpose. It was at this point that Wilberry sought an interdict to prevent Spring Forest from concluding a new lease agreement and the interdict was granted by the Durban High Court.

As a result, Spring Forest applied to the Supreme Court of Appeal to confirm the validity of the cancellation of their agreement with Wilberry so that they could continue doing business with their new lessor.

The Ruling

The issue that the Supreme Court of Appeal had to decide on was whether the names of the parties appearing at the bottom of the emails were in fact ‘signatures’ as required by the non-variation clause in their lease agreement to cancel the agreement.

Take a look at a snippet of the emails exchanged between Spring Forest and Wilberry:

11:56 am:

‘Hi Nigel,

Further to my previous mail, to clarify point 2. Please confirm that should we elect this option to walk away, there will be no further claim or legal action from either side.

Kind Regards,

Greg’

12:18 pm:

‘Hi Greg.

That is correct.

Nigel.’

The Electronic Communication and Transactions Act (ECTA) recognises agreements that are concluded by email. Section 13 of the Act states that “where the signature of a person is required by law and such law does specify the type of signature, that requirement in relation to a data message is met only if an advanced signature is used” and that “an electronic signature is not without legal force and effect merely on the grounds that it is in electronic format.”

An ‘advanced electronic signature’ is a signature that has been accredited by the Accreditation Authority whereas an ‘electronic signature’ is simply intended to serve as a signature by the user in digital communication.

Spring Forest Trading argued that the recording of the names at the end of the emails met this requirement but Wilberry submitted the opinion that it did not amount to an “advanced electronic signature.”

The Supreme Court of Appeal ruled in favour of Spring Forest Trading and held that the names contained at the end of the emails met the requirements for electronic signatures where a private agreement exists between the parties.

The Court confirmed that the Act requires an ‘advanced electronic signature’ only where the signature is required by Law (such as in the sale of immovable property or the drafting of a will) and not where private individuals conclude an agreement.

Protect yourself!

It is clear that the consequences of the Spring Forest Ruling could affect every aspect of the rental property market where disputes in terms of agreements between private individuals often arise due to the sheer nature of the many variables at play.

There are two ways of ensuring that you are protected. One, be very careful what you commit to sending via email! Two and most importantly, make sure that your lease agreement cannot be cancelled or amended without you meaning to do so!