CMS Expert Guide to e-signatures in commercial contracts

Digital transformation affects all aspects of a business’s operations, including contracts, internal documentation and employment relationships. This trend has been accelerated by the COVID-19 pandemic which has created the need for contactless and remote contracting, as a result of which businesses are turning to digital contracting and electronic signatures. Using the appropriate form of e-signatures helps businesses save time and money, increase security, and enhance their environmental credentials.

This guide to electronic signatures provides an overview in relation to a large number of international jurisdictions. It covers specific legislative requirements in order to show companies and organisations which electronic signature and electronic contracting solutions are accepted under national law. It gives information on the acceptance and enforceability of contracts and legal statements signed with electronic signatures, the type of electronic signatures which are legally binding, and other digital solutions for contracting and making legal statements.

Based on our international survey, we have established that the type of electronic signature required will depend on whether the national law mandates the written form for an agreement or other legal statement, and what kind of electronic signature is considered sufficient under the circumstances. Therefore, our starting point is the definition of what constitutes a written statement and the types of e-signatures accepted by each nation's legal system. We then give examples of agreements and legal statements where the written form is mandatory in each practice area. Finally, we explain the cases when only a wet-ink signature is acceptable, and no electronic signatures are allowed.

This guide focuses on commercial contracts where electronic signatures are used. It includes an overview that compares the different legal situations and uses of e-signatures across each of the international jurisdictions.

Please note that this does not purport to be a comprehensive guide to the law. If you require more detailed information about any jurisdiction, please turn to the CMS lawyers who are listed in the country chapters below.


Definitions

This guide covers a number of types of e-signatures that have different legal relevancy and uses the following terms throughout.

Electronic signature or e-signature, which covers all technologies and digital solutions that enable businesses and individual persons to create electronic signatures, including putting the image of a handwritten signature on a document,  signing with pin codes, signing via ticking a checkbox, typing the name on an electronic document, or signing with an e-signature certification issued by a trusted service provider. As a high-level definition, an electronic signature is electronic data which is attached to or logically associated with other electronic data and which the signatory uses to sign.

In comparison with an electronic signature, a digital signature is technology that uses algorithms and encryption-decryption methods to detect unauthorised modifications to data and to authenticate the identity of the signatory (electronic identification). Digital signatures use PKI to verify the identity of a signatory. PKI uses two keys, one public and one private, for unique identification. Both the sender and recipient must have a digital certificate from a certificate authority.

Simple/standard electronic signature (SES), which means electronic data that is used by the signatory to sign and is attached to or logically associated with other electronic data, e.g. if a person attached his/her signature panel or name to the end of an email or simply typed his/her name at the end of a Word document. A SES does not verify the issuer’s personal identity or the integrity of the text, i.e. it cannot be guaranteed that the text has not been changed.

Advanced electronic signature (AES), which is a special type of digital signature that it is uniquely linked to, and capable of identifying, the signatory.

Qualified electronic signature (QES), which is a special type of AES digital signature that is created by a qualified electronic signature creation device and is based on a qualified certificate for electronic signatures. A QES and related qualified certificate can only be issued by a qualified trust service provider, which is designated by a supervisory body in each country.

Electronic time stamp, which is a digital data that certifies the date an electronic signature was created.

The eIDAS Regulation: Regulation (EU) No. 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC, which applies directly in each EU country in the CEE region (Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia).

It should be noted that on the basis of the eIDAS Regulation, in EU member states an electronic signature cannot be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures. Furthermore, the eIDAS Regulation stipulates that a qualified electronic signature will have the equivalent legal effect of a handwritten (wet-ink) signature, and a qualified electronic signature based on a qualified certificate issued in one EU member state will be recognised as a qualified electronic signature in all other member states.

However, it varies from country by country whether other types of electronic signature, e.g. an AES or SES, are accepted as having the equivalent legal effect of a handwritten, wet-ink signature.