How to sign documents electronically in the time of coronavirus (or any other time)?
When and how can contact with a counterparty be avoided and the document signed electronically? Is it possible to consider the electronic way of signing relevant for the eligibility of such a conclusion of a contract and how does Czech legislation and case-law treat this?
Previously, many people worked remotely or from home, and in connection with the spread of coronavirus, the number of such persons has increased considerably, often amounting to the whole or a substantial part of the company. Although such a way of working does not normally affect the normal mode of business, some important activities may be limited - such as the conclusion of contracts, if they are required in writing. Although it can be argued that a contract can be signed and sent e.g. by courier to the counterparty to secure its signature, this may not be possible or appropriate in all cases, either given the limited transport capacity of the deliverers and some delay in signing, or even with hygiene safety, where this method does not safely exclude possible transmission of viruses. Electronic signing of contracts and documents certainly offers an alternative that excludes these two aspects. On the other hand, the question arises – does such an approach have any impact on acknowledgement of such contract conclusion? How does Czech law and case law approach this?
Lack of specific formality on contractual arrangements
Contracts may be concluded electronically without major restrictions and such conduct may be deemed to be proper if the contracting parties do not insist on compliance with the requirement of a written form, respectively where such form is not required by law for the relevant contract type. Indeed, most of the contracts to be concluded are governed by the principle of lack of formality, in which the parties are not restricted in any way by choosing the form for conclusion. Therefore, an electronically concluded contract will generally be considered valid and the content of the agreement between the parties will be governed by the electronic agreement. For most electronic negotiations, it will even be possible to conclude that an electronically concluded agreement was also electronically signed, albeit with a 'simple' electronic signature. The eIDAS Regulation,
which distinguishes several levels of electronic signature, has produced a considerable tolerance in the signing of documents, with virtually no requirement for a simple signature. Even the simple stating of a name at the end of an email can be considered such a signature. The eIDAS Regulation explicitly states that even a simple electronic signature must not be denied legal effects and must not be refused as evidence in judicial or administrative proceedings.
Of course, in this way of concluding contracts, the parties are not limited in the way they increase their confidence in the electronic agreement. In this respect, they can strengthen their position in particular in two respects, namely A) confirmation of the content and immutability of the agreement and B) verification of the identity of the person acting. The content of the agreement can be confirmed, for example, by concluding the agreement in an unalterable electronic format (in particular * .pdf with a higher form of protection against change).
Regarding the verification of the identity of the acting person, it is appropriate to use some higher form of authentication (in particular multi-level authentication, authentication using a separately sent password, etc.). Some of the commercially available services (known worldwide e.g. DocuSign or AdobeSign) can be used for a certain fee (paid by at least one party) both in the content confirmation and in the identity verification of acting persons. On the other hand, other methods can be used, especially commonly available software tools for creating and locking documents, using the higher authentication method for some mailboxes, using telephone number verification, using four-eye checking on both sides, etc. they may then be subject to a separate agreement on the method of electronic signing. The use of such methods, in our opinion, may even lead to the requirement of a written form being met. Unfortunately, however, the current case law is not very much in favor of such a view, so we recommend this approach rather cautiously (see below).
The requirement of written form and electronic signing?
The eIDAS Regulation is without prejudice to national legislation on the requirements of the form of legal acts. Therefore, it is the Czech legislation that determines when a written form is considered to be observed and when it is necessary to observe it. In this respect, the provisions of Sections 561 and 562 of the Civil Code, which determine the basic prerequisites for how the written conduct is to be electronically signed (Section 561 of the Civil Code) and when the written form is considered to be maintained even in legal acts made electronically (Section 562), are crucial. The relationship between these two provisions is somewhat complicated in view of historical developments, and even the Czech courts do not interpret these provisions quite consistently (in particular, the more benevolent approach of some lower courts is evident, as opposed to the still rather conservative approach of the Czech Supreme Court). Although we do not fully agree with this view, according to the prevailing view in case law, it is necessary to meet the requirements of both these provisions in order to preserve the written form, i.e. it is necessary to meet the requirements of Section 561 of the Civil Code (signing electronically) as well as the provisions of Section 562 thereof (sufficiently capture the content of the legal action and identify the acting party). However, this should not be a major problem today.
Some of the above methods of higher (multi-level) verification of the person's identity and ensuring the immutability of the content of the document will usually be sufficient to adequately capture the content of the legal action and identify the person acting. In accordance with the Act on Services Enabling Trust in Electronic Transactions (Act No. 297/2016 Coll.)
and the eIDAS Regulation, it will then be sufficient to use any type of electronic signature (including simple or "other electronic signature" within the meaning of the Act). In our opinion, such an electronically concluded and signed legal act will meet the requirements for written form.
The case law of the Supreme Court of the Czech Republic has so far held the opposite view and considered the electronic signature only in the form of a recognized electronic signature, being a guaranteed electronic signature based on a qualified certificate. However, the case law of the Supreme Court of the Czech Republic has not yet assessed the effectiveness of the eIDAS Regulation and the aforementioned Act on Services Enabling Trust for Electronic Transactions, and we believe that the Court's previous views must now be considered to be outdated and that it is possible to rely on these advanced (albeit not qualified) forms of concluding contracts. It is indisputable, moreover, that they often offer far greater legal certainty than a contract concluded by means of a few loosely bound sheets of paper.