During a country-wide lockdown, distance contracting becomes more relevant than ever. Below we summarise the most common approaches and their pitfalls.
Do I really need a contract in writing?
Contracts are concluded in many ways: in writing, orally (“Here’s some money, please go to the store for me.” “OK.”) and even implicitly (placing groceries on the conveyor belt, paying for them and taking them away.) While the written form of contracts is recommended, because it documents and provides evidence, we should keep in mind that the law only prescribes the written form in specific cases. The most common ones are: a general power of attorney; acts whereby corporate entities are founded (such as the memorandum of association of a limited liability company); employment contracts and notices of termination, and transfers of real property. This means that in most cases including common supplier-customer relations, a written form is not obligatory.
It is also necessary to differentiate between the form of the contract (meaning its content) and the requirements for its signature.
What does ‘in writing’ exactly mean?
The legal definition of the written form is currently insufficient. The Civil Code (Section 562) stipulates that the written form is also maintained when juridical acts are made by electronic or other technical means enabling their contents to be captured and the acting person to be identified. The relationship with the provisions of Section 561 remains unclear, under which the validity of a juridical act made in the written form requires the signature of the acting person. A signature may be substituted by mechanical means, where it is usual to do so. Another legal regulation provides how a document can be electronically signed when making juridical acts by electronic means.
From this sketchy regulation, it may seem that if content is captured sufficiently (e.g., by the text of an email) and the acting person is identified (e.g. by their signature in the ‘name and surname’ format, possibly also by their office within the company, its registered office and corporate ID), this would constitute a juridical act in writing. Yet, case law has so far been rather sceptical in this respect, mainly as regards the signature (leaving aside legal curiosities such as a gift agreement of an apartment in form of a comics – which was, by the way, accepted by the real estate register as a written contract).
How can contracts be signed?
As regards the pure ‘paper form’, there are two types of signatures: a ‘common‘ handwritten signature, and a verified one; the latter is only required by law in specific cases, such as powers of attorney in the form of public deeds (typically used for making substantial changes to a business corporation), or deeds for entering rights in rem to real property in the real estate register.
As regards electronic juridical acts, the situation is more complex. Effective 1 July 2016, eIDAS regulations distinguish between a simple electronic signature (e.g., the common signature in an email), an advanced electronic signature (ensuring the integrity of the document) and a qualified electronic signature, based on a qualified certificate ensuring the signing person’s identity and equalling a handwritten signature. Unfortunately, not even this signature is generally viewed as the digital equivalent of a verified handwritten signature. And to make things even more complicated, the Czech Act on Trust Services for Electronic Transactions and the new Act on Right to Digital Services also add a recognised electronic signature to it, while from the perspective of the mentioned eIDAS, this may be either an advanced or a qualified electronic signature, depending on the circumstances.
To conclude: meeting the above outlined requirements for a sufficiently qualified electronic signature is rather demanding in practice, and in some cases (e.g., when concluding an employment contract, to give an illustrative example) evenly impossible; and the solutions are not the most practical or efficient, anyway.
What to do, then?
One should assess the statutory requirements for the form of the contract being concluded and for its signing. For common commercial contracts, it should be no problem to agree with the counterparty on the ideal form of a contract. While doing so, remember to also cover any subsequent communication and possible changes to the contract (e.g., whether an amendment may be concluded by email, whether email communication shall be considered by the parties as the written form, or whether some acts should be limited to concrete persons and/or communication channels, including specific applications). Analogously, it will often suffice to exchange a scan of the signed contract via common communication channels (typically, email).
Where the qualified verification of an electronic juridical act is required, it is advisable to proceed with prudence. Sadly, the legislators have not kept up with technical progress in this respect, which is especially painful under the current extraordinary circumstances.
Of course, if in doubt, there is still the good old paper form with handwritten signatures, delivered by post or courier. Even then, however, you cannot be 100 percent sure that it has indeed been signed by the desired person.