Electronic Signatures, Suretyship Agreements and the Perils of Procedural Missteps

A recent judgment of the Western Cape High Court in Momentum Metropolitan Life Ltd v Lavender Hill Trading 544 CC and Another has stirred debate about whether South African courts are softening the rules on electronic signatures in suretyship agreements. The decision, however, is less a signal of changing law than a stark reminder of how procedural missteps can decide a case before the merits are even reached.

The matter concerned a deed of suretyship signed electronically by the second respondent. It was common cause that the signature used was an ordinary electronic signature, not an advanced electronic signature accredited under the Electronic Communications and Transactions Act 25 of 2002 ("ECTA"). This distinction is crucial: section 6 of the General Law Amendment Act 50 of 1956 ("GLA") requires that all suretyships be in writing and signed by or on behalf of the surety, and section 13(1) of ECTA makes it clear that certain signatures which are executed electronically where the type of electronic signature is not specified, only an advanced electronic signature satisfies the statutory requirement.

On the face of it, the absence of an advanced electronic signature could have rendered the suretyship invalid. This was the finding in the Johannesburg High Court’s 2020 Massbuild v Tikon Construction decision, where the lack of an accredited signature proved fatal to the creditor’s claim.

Yet in the Momentum matter, the court granted summary judgment in favour of the creditor. The reason was not a redefinition of the law on electronic signatures. Rather, it was that the surety had already admitted in her plea that she bound herself as surety, and had failed to raise the ECTA-based defence in her initial pleadings or opposing affidavit. By the time she attempted to advance it at the hearing, all her pleaded defences had been abandoned. In the court’s view, the late reliance on the statutory formalities amounted to “elevating form over substance”.

This outcome has been mischaracterised in some quarters as a decisive endorsement of substance over form. That interpretation is misplaced. The judgment turned squarely on the procedural posture of the case, not on a relaxation of statutory requirements. The underlying principle from Massbuild remains i.e., if a suretyship is concluded electronically, it must carry an advanced electronic signature to be valid. This is an express requirement of ECTA.

The real lesson here is twofold. First, for practitioners, the importance of precision in drafting and defending pleadings cannot be overstated. A strong technical defence is worthless if it is not raised timeously and framed correctly. Second, for creditors, the formalities in section 6 of the GLA read with section 13 of ECTA remain binding. A procedural win in one case should not be mistaken for a safe precedent to ignore compliance.

In a business world where contracts are routinely signed and transmitted electronically, the law’s formal requirements are not an anachronism. They are the legal infrastructure that determines whether an agreement is enforceable at all. Those who neglect them, whether by omission in drafting or complacency in litigation, do so at their own peril.