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Going paperless with your business partners

Electronic signing services which allow business partners to conclude contracts electronically are becoming increasingly more common on today's market. The signatory simply adds his/her signature by typing on a keyboard, a tablet or with one click, the contract is then secured to prevent any further changes, and saved in the cloud together with information on how and when it was signed. Several parties can sign one document separately at once using this application. The simplicity and speed of the electronic process are the main reasons for the increasing use of electronic signing services such as DocuSign, EchoSign or VeriSign.

Does the electronic signature process have the same legal effect as a handwritten signature?

FAQs:

• Is a paperless contract legally binding? Yes, the contract is binding under Czech law, unless the law requires it to be in written or another specified form. Under Czech law, contracts should be concluded in specified form only rarely, e.g. for transfer of immovable property. You should also make sure that a specific form is not required in your current agreements with your business partners, such as an agreement that all orders will be executed in writing.
• How can the true identity of the signatory be proven? Electronic signing services to a certain extent provide security that only the signatory has exclusive access to the contract by various means. A contract can be accessed on the basis of a link sent to a specific e-mail address. The signatory may also authorize via an SMS password or a certificate. In the USA, precedents already exist where the disputed part of an electronic agreement was proven by transaction records and expert opinion. No similar judgements have yet been issued in the Czech Republic, however we may expect that the courts would consider the information obtained from the information systems of "electronic signing services" to be reliable under Section 562 of the Civil Code. Therefore, the signatory denying his/her signature would have to prove that he/she did not sign the contract.

According to our experience, large international companies were among the first to accept electronic signatures. These companies may often prefer business partners that are willing to enter into the contract electronically.
Should you be considering adopting paperless contracting, we suggest the following practical recommendations:

• Go step-by-step. Start with contracts which have lower value and are not binding in the long-term. The range of contracts you would be willing to conclude electronically may be extended later.
• Insert an express provision that the contract is governed by Czech law. If the contract is governed by another law, ask your partner how electronic signature is regulated under the given law.
• Make sure no specific form is required. If you are concluding a contract you are not familiar with, ensure that both the law and your agreement with your business partner do not require written form.
• Trust and check. Conclude contracts electronically with business partners you know well and trust. Consider confirming more important transactions by other means, e.g. by phone.
• Take care with contracts for public authorities. Presenting a paperless contract to a public body could (for now) cause you a lot of explaining. Where a contract is intended for a public body's decision, we suggest concluding it in written form.

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[1] Notice: This article does not discuss the signing of electronic documents via a certified electronic signature according to the Act No. 227/2000 Col., on Electronic Signature, which allows to verify the signatory.

Authors: Pavel Hejl, attorney and Martin Roubíček, lawyer, Bird & Bird s.r.o. advokátní kancelář