In Austria, like in many other countries, the current restrictions due to the COVID-19 situation are causing extensive and opaque changes in social life and related legal issues. Although home office has become well established, it is still associated with limited opportunities for personal interaction. The situation raises many legal questions, one of which is how people can pragmatically conclude or sign a legally effective contract.
Questions which increasingly arise include whether and how contracts under private law, annual financial statements, and other official documents may be signed “electronically” and what evidentiary value an electronic signature has. In any case, it should be noted that in Austria the following different electronic signatures have different legal effects.
Simple Electronic Signatures
Simple electronic signatures are probably the most commonly used form of electronic signature at present. With a simple electronic signature, data in electronic form is merged with other electronic data. The signatory thus uses this data to sign documents. In practice, documents are transmitted to the other party, who loads the data into the software of an external provider, and only then can the document be digitally signed. Documents that are simply digitally signed are admitted as evidence in official proceedings.
The simple electronic signature is sufficient in cases where there are no special or strict formal requirements (e.g., internal corporate processes, travel expense reports, and private-law contracts). A simple electronic signature basically only has the purpose of identifying the author of a message. It can be created with various programs and applications on smartphones, tablets, and computers.
Qualified Electronic Signature
However, only a so-called “qualified electronic signature” is equivalent to a “handwritten signature.” Qualified electronic signatures meet the legal requirement of “written form” within the meaning of Austria’s General Civil Code. Additional legal formal requirements, such as provisions requiring the addition of a notary or lawyer (i.e., certification or notarial deed) or legal family and inheritance law transactions that require a written form are not affected by this, as in these cases a qualified electronic signature does not have the same legal effect as the written form. Otherwise, however, electronic contracts signed with a qualified electronic signature are just as legally binding as if the contract had been signed “by hand.”
A qualified electronic signature with legal effect can be used where a “written form” within the meaning of the Austrian Civil Code is required, such as when concluding and terminating a fixed-term rental agreement or shareholder resolutions of limited liability companies, which can be made in writing by circulation and no notarization or submission to the commercial register is required.
Of course, in everyday business, not every person will be able (or will want) to rely on software or trust service to digitally sign a declaration of intent, especially when it has to be done “quickly.” A practical way of fulfilling the criterion of written form even without external providers or the use of special software is to print out the document at home, sign it, and send it back to the contractual partner. Although not everyone has a scanner at home, even a photograph of the signed contract document, which can be taken via mobile phone, is sufficient to meet the criterion of written form, although a previously scanned-in signature copied onto the contract document is insufficient. Unless more restrictive legal formal requirements are applicable, contracts may provide that digital signatures are excluded.
Cases in which a qualified electronic signature does not have the legal effect of a signature in written form and in which an “original” handwritten signature is still required include, among others, matters relating to declarations of surety or legal transactions under family and inheritance law that are bound by form. Declarations of intent in family and inheritance law and declarations of surety can only be electronically signed if a notary or a lawyer was involved in the conclusion of the declaration in an advisory capacity and a corresponding declaration was also documented with the professional signature of this notary or lawyer. The making of testamentary dispositions in electronic form are also prohibited, as are legal acts which are bound by other legal formal requirements and which require the involvement of a notary or a lawyer.
In crisis situations that require home office, the use of digital signatures can make legally effective declarations of intent. However, an e-mail without a secure digital signature is no more equivalent to a written contract document with a handwritten signature than a signature that has only been scanned, a fax, or a copy.
By Andreas Schutz, Partner, and Christopher Bakier, Associate, Taylor Wessing