Often the perception is that once you have “signed on the dotted line” the contract can be stored and need only be consulted when trouble arises. This is revealing of how contract management is still not recognised as an important management tool for most businesses. It is seen generally as a discipline belonging only to the largest of companies and of small relevance to other businesses. Accordingly, most businesses have limited capacity to manage the ever-burgeoning volume of contracts being concluded by them. This in turn implies that organisations struggle to understand the legal implications of their contracts and improve the risks being assumed by them therein, posing significant risks for organisations only able to manage contractual issues reactively.

Poor contract management further leads to a lack of awareness of the contingent obligations being assumed by your business, a lack of understanding of contractor performance and in general an inability to evaluate the effectiveness of contracts concluded. Management decisions are unsupported by data which allows comparison, often resulting in weak contracting positions, monetary losses or even reputational damage.

But what can a business do to start managing its contracts more effectively?

The first step is to recognise that a contract is not done once it’s signed. In reality, that is only the start of the management process in what is often termed the life-cycle of a contract. This inevitably includes signing, implementation, monitoring, amendment, renewal and termination. Each step is important and a business must know at what phase of the life-cycle each of its contracts are in order to manage the different risks relating to each phase.

The second step is to ensure that certain core tasks are executed in respect of each contract. These tasks are:

Identify your important/high risk contracts and ensure that these are managed and reported on to management.
Assign responsibility for these contracts to a person(s).
Identify the most important or high risk items in each contract and focus on managing those.
Identify important dates or milestones arising from a contract and diarize them.
Look at the key performance requirements (yours or those of the other party) and monitor them through feedback from staff or other performance assessment tools.
Be careful of contracts automatically expiring or renewing. Manage these important dates by timeously reviewing the contracts before they terminate or renew.
Record changes or amendments to contracts in writing and ensure that these changes are properly negotiated.
Review your standard contracts periodically to determine whether they are still appropriate and up to date with legislation.
How can I ensure that my contract management remains effective?

In order to ensure that a contract is managed effectively and that the core tasks are performed a system must be put in place. In most organisations, contract management tends to be paper based with contracts organised into hard copy files and with important details frequently living only in the memory of an individual or saved on a personal spread sheet. Loss of the person usually means loss of this knowledge, with potentially disastrous consequences for an organisation.

With the development of IT technology more and more businesses are realising the benefits of having at least a central storage depository for their contracts or for the more advanced, exploring the use of automated contract management systems which can be used to store important contract data. If used correctly these systems can add great value to an organisation and can bring order to the ‘chaos’ which often surrounds a paper based system. These systems also allow executives to gain an overview of all of their contractual obligations and commitments, enabling more effective planning and risk assessment.

One of the main advantages of an automated contract management system is the assistance it can provide with the administration of the contract. These systems can be used to store all the documentation necessary in order to create a clear audit trail throughout the life-cycle of the contract. They can also store a copy of the contract which can then be accessed by multiple parties authorised to do so and required to be involved in the management of the contract. These systems can also keep track of important dates and milestones and remind parties of upcoming deadlines.

In summary:

Whether or not your organisation is using an IT tool or merely using your own paper based system to manage contracts, the critical element to contract management remains the allocation of responsibility to individuals. Each contract must have an ‘owner’ who assumes responsibility and keeps management informed of events relating to the contract. Without this assignment of responsibility, even the best contract management system will eventually lead to failure.

So, whether your procedure is sophisticated or rudimentary, make sure that the core tasks mentioned above are implemented and ensure that the importance of managing your contracts receives the necessary appreciation within the organisation. Discuss with your attorney or contract specialist ways of refining your current system and implementing management protocols and systems that will allow you to remain on top of your contracts.



Can you cancel a contract by email?
Posted on 16 March 2015

Your agreement is signed, sealed and delivered! You know that in the agreement a non-variation clause stipulates that no variation or consensual termination of the agreement shall be of any force or effect unless in writing and signed by both parties thereto. This clause seems simple enough…. If you want to cancel the agreement, all you have to do is ensure that it is in writing and signed. What can possibly go wrong?

We live in a day and age where electronic technology has become the primary platform for communication. Emails, Twitter, Facebook, Instagram and instant messaging services such as Whatsapp and BBM are electronic platforms we are all familiar with. The question that now arises, however, is whether an email would meet the standard requirements of a non-variation clause requiring any variation or cancellation of an agreement to be reduced to writing and signed by both parties to the agreement.

This question came into focus in the Supreme Court of Appeal case of Spring Forest Trading CC v Wilberry (Pty) Ltd t/a Ecowash & Another. Here the court found that the exchange of emails between parties to an agreement, with each of the parties typing their first names at the end of the emails, was sufficient to cancel an agreement, which could only be cancelled in writing and signed by both parties.

In this case the court relied on the Electronic Communications and Transactions Act 25 of 2002 (“the Act”) and found that the requirement that an agreement had to be cancelled in “writing”, is satisfied if it is in the form of data messages and in this case the email met this requirement. With regards to the “signed” requirement, the court had to consider whether the parties’ names at the end of the emails, constituted a signature in terms of the Act, which provides that where an electronic signature is required by the parties and the parties have not agreed on the type of electronic signature to be used, that requirement is met if –

• ‘a method is used to identify the person and to indicate the person’s approval of the information communicated; and
• having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.’

A signature is commonly understood as a person’s name written in a distinctive way and serves as a form of identification. Our courts have generally adopted a practical rather than a formalistic approach to signatures. The question which remains, however, is whether the method of the signature used fulfils the functions to authenticate the identity of the signatory, rather than insist on the form of signature used. In terms of the Act, an electronic signature is defined as ‘data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature’. In the case above, the court held that the typed names of the parties at the end of the emails were intended to identify the parties and therefore constituted data that was logically associated with the data in the body of the email correspondence and accordingly constituted an electronic signature and this satisfied the requirement of a signature.

While our courts treat email communication in a similar manner to written communication, we cannot help but wonder whether a court will also be comfortable with a Tweet, Facebook, Whatsapp or BBM message whereby a cancellation message is sent merely with a typewritten name at the end.

It is evident from the above, that a non-variation clause is not necessarily that simple. Contracting parties should be cautious of their communications with each other, especially when using emails and messaging platforms such as Twitter, Facebook, Instagram, Whatspp and BBM. In order to avoid disputes and ambiguity in the future, it is advisable to stipulate in the agreement that electronic signatures will either not apply to amend or cancel an agreement or alternatively to regulate clearly in the agreement how electronic communications will apply. If you are unsure of what your contract says or unsure as to how to incorporate/exclude the position regarding electronic signatures and electronic communication in/from your agreements, contact a commercial specialist that can assist you to address your concerns. The reality is, electronic communication cannot be ignored and it is prudent to ensure that you understand how to safely orientate yourself contractually within our digital age.

employment contract

employment contract

Top 5 aspects that should be included in your employment contract
Posted on  19 October 2014


You’ve just landed what should hopefully be your dream job and your new employer has provided you with your employment contract to sign. You want to sign, make it official and celebrate but you are worried that you may be missing something important. What are the key aspects you should be looking for in your employment contract?

Firstly, its important to understand the nature of an employment contract. A contract of employment is defined as an agreement between two parties in terms of which the one party (the employee) undertakes to place his personal services at the disposal of the other party (the employer) for an indefinite or fixed period of time in return for a fixed or ascertainable remuneration, and which entitles the employer to define the employee’s duties and control the manner in which the employee must perform them.

The employment contract is therefore an important document in the employment relationship as it defines and regulates the relationship between the employer and the employee. Accordingly, it is important to carefully consider any employment contract before signing such. There are many potentially important terms that an employment contract can deal with, but these are the top five important items:

1. The nature and description of the job

As an employee you will be required to provide your services to the employer. The employment contract must accordingly specify your job title and a description of the basic requirements of your work. The more specific and clearer your work requirements are defined the better. It is impossible to define each and every aspect of a job, but the contract should provide sufficient clarity to enable you to understand what you are being appointed for and what you will be required to do, including locations you will be required to work at, working hours etc.

2.  Remuneration and benefits

An important reason for you taking the job is the good pay and benefits you were promised! These must be spelt out in detail in the employment contract. As an employer is required to compensate you for your labour, your remuneration package (at least at the start of the new job) must be included in the employment contract. The employment contract should detail what your remuneration will be, when it is payable, whether or not it includes commission, whether there will be any deductions, whether an annual bonus is payable etc. Additionally, any benefits you will qualify for, such as medical aid, travel allowances, pension fund etc. must also be included and specify clearly what the respective employee and employer contributions will be.

3. Duration

The term of your employment contract is very important. Employment contracts are typically either permanent or fixed term. The employment contract should specify when your employment will commence and when or on what terms it may terminate. In the case of a fixed term contract, the period of the contract and the options for renewal (if any) should be clearly stipulated. If your appointment is on a permanent basis, it may also be important to note whether your appointment is subject to a probationary period, and if so for how long and on what terms.

4. Leave

Your employment contract should stipulate the various forms of leave for which you will qualify, including the requirements for taking leave. This will include statutory leave such as annual leave, sick leave, maternity leave, family responsibility leave as well as other possible forms of leave such as study leave, sabbatical leave, unpaid leave, half-day leave and more.

5. Termination

Your employment contract should specify how your employment with the employer may be terminated, including the notice periods applicable, under which circumstances a party can terminate and what is expected of each party should the employment relationship be terminated. As an employee it is important that you take note of any restraints on your future employment, confidentiality restrictions and possibly even penalty conditions which may be applicable to you on termination of the contract.

Your employment contract is the starting point for a successful and productive relationship with your employer. What you don’t want at the start of the relationship is questions and uncertainty regarding your relationship. So take the time, and where necessary, obtain legal advice to assist you in understanding your employment contract and ensuring that the employment contract provides the right foundation for your future growth in the organisation.