Digitization of the contract conclusion

The digital conclusion of legally binding agreements at a distance has not only been an issue since the Corona pandemic, but the pandemic has given the topic another boost. Due to the increased (temporarily sovereignly ordered) home office, it became difficult in many companies to find two authorised signatories at short notice who are allowed to conclude a contract according to the applicable signature regulations. 

The Federal Council then temporarily abolished the physical authentication required by law to obtain a qualified electronic signature (QES) - the equivalent of a handwritten signature - and allowed virtual authentication. Although this was certainly a sensible measure, on closer examination, QES is not necessary in most cases. Before going into the use of digital signatures, it is therefore worth taking a look at the general requirements of a contract conclusion and the applicable formal requirements. 

Unanimous expression of will

The Swiss Code of Obligations stipulates in principle that the conclusion of a contract requires the concurring mutual expression of the parties' will(Art. 1 para. 1 CO). Such an expression of will may be express or tacit(Art. 1 para. 2 CO). Therefore, a contract does not necessarily have to be concluded in writing. 

Writing

Unless the law provides for a special form, a contract may also be concluded tacitly or orally. Contracts only require a special form (such as writing) to be valid if the law prescribes such a form (cf. Art. 11 CO). 

For evidentiary reasons, it is risky to rely solely on an oral agreement, which is why in many cases the contracting parties choose the written form. For many forms of contract, the written form is now so firmly anchored in everyday life that it is mistakenly assumed that there is a requirement for writing. 

In Swiss law, however, there are only a limited number of contracts that require simple or qualified writing or even public certification. In day-to-day business, the usual contracts can be concluded without signatures. However, most companies find this too uncertain and require some form of signature or confirmation. The digital transmission or the digital signature harbour some dangers, as the evidential value can quickly be lost if handled incorrectly. 

Digitised contracts

One possible form of confirmation is the signing of a physical document, which is then scanned and sent to the contracting parties by e-mail. This sounds like a simple method, but it involves legal risks, as there is a media disruption and possibly a problem of proof. If the authenticity of the signature is disputed by the signatory, the authenticity would have to be proven by the other party. However, the Federal Supreme Court has stated in a decision(9C_634/2014) that no graphological verification of the signature is possible if the signature is not original. In most cases, the signature is not disputed in civil proceedings and the evidence is not provided by this one document alone, but nevertheless, this approach increases the risks. 

The risk can at least be reduced if care is taken to ensure that the scanned contract is sent from the personal business email account (preferably with a signature) and that all signatories are copied. However, this requires that the recipient subsequently archives the e-mail together with the scanned document in a legally compliant manner in accordance with GebüV . Together with the e-mail, it should be possible to refute a denial of signature. Unfortunately, the storage of various e-mails can quickly become tedious and confusing, which makes a legally compliant implementation rather cumbersome.

Electronic signature (electronic signature) 

A media disruption can be avoided through digital implementation. There are already various providers who offer this service as a platform. When selecting one, however, it is important to carefully check which electronic signatures are used. 

In Switzerland, the electronic signature is regulated in the ZertES and in the EU in the eIDAS Regulation. Both laws know three comparable types of electronic signatures. 

  • Simple electronic signature (EES): Suitable for documents without great liability risk and of a rather informal nature.

  • Advanced electronic signature (FES): Suitable for documents with calculable risks and without legal formal requirements.

  • Qualified electronic signature (QES): Suitable for documents with high risks and/or the legal formal requirement of writing.

  • Switzerland also has a regulated electronic seal.

Although both laws provide comparable definitions and similar technical specifications, there is no bilateral agreement on mutual recognition. This has corresponding disadvantages, especially in the case of cross-border use. In the worst case, the validity of a foreign EES or FES could be disputed in Swiss proceedings. In the best case, this would lead to an increased burden of proof and, in the worst case, to the rejection of the contract as evidence. However, there are also practical disadvantages: The Swiss and EU signatures cannot be combined in one document. In this case, two different documents would thus have to be created and signed. 

"If there is a written form requirement (legal or contractual), only a Swiss QES can be used for documents under Swiss law".

- Yves Gogniat

If there is a written form requirement (statutory or contractual), only a Swiss QES can be used for documents under Swiss law, as this is prescribed by Art. 14 para. 2bis CO. However, the QES is not yet widely used even in Switzerland and hardly any foreign signatory will have a Swiss QES. 

When using electronic signatures, a company must first carry out a risk analysis and define appropriate processes. It is also important to ensure that a QES is always used for contracts that require writing.  

Contractually agreed written form

As a company, one is confronted with the fact that a clause on written form can be found in most contracts. The following is an example of such a standard clause: 

"All amendments and additions to this contract must be made in writing to be effective. Any addition, deletion or modification of individual provisions shall qualify as a change or amendment. This also applies to an amendment of this agreement on the written form."

The contractually agreed written form means that only a QES can be used to sign or amend such contracts. For individual contracts, the clause must therefore be adapted accordingly. However, as this can be easily forgotten, companies with frequent transactions are better advised to record a deviation from the written form requirement in a framework agreement. For example, it could be stated that an EES or FES signature can be used in deviation from the written form requirement.  

Signatory powers and collective signature

Just because an electronic signature is suddenly used, this does not mean that internal or public signatory powers have been abolished. Therefore, it must still be ensured that, for example, the collective signature is adhered to. If there are signature and representation regulations, these should be adapted accordingly and electronic signatures should also be explained and regulated in them. 

We are pleased to support you in the legally compliant introduction of digital contract signing as well as in other digitalization projects. We can draw up appropriate standard clauses or a framework agreement for you and check which contract forms still require a written or QES signature. 

This article was written by RA Yves Gogniat.

 Please contact Balthasar Wicki directly.

Procedural law, digitalisation, contract lawGuest author