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Is the Confusion Surrounding Emails Finally Coming to an End?

Is the Confusion Surrounding Emails Finally Coming to an End?

Hungary
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To this day, the domestic legal system has remained silent on how contracts concluded by email should be treated. However, legislation recently adopted in relation to the COVID-19 pandemic explicitly allows communication via email between a company and its private-individual members. Could this be the first step towards a more comprehensive legal acceptance of emails?

We send and receive hundreds of emails every day and electronic messaging has become an integral part of our lives. And it’s become perfectly normal for us to document our agreements in an email exchange. So it may come as a surprise that our legal system is still not clear on how such an agreement should be treated.

The limits of email

The Civil Code devotes several paragraphs to electronic contracting, such as when we order something through a website. However, it does not consider contracts concluded by electronic mail as electronic contracting.

In certain cases, it is a legal requirement for a contract to be established in writing. According to the Civil Code, a declaration (and a contract concluded in this way) is also deemed to be in writing if it is communicated in a form that allows for the contents of the statement to be retrieved in unaltered form, and for the person who made the declaration and the date on which the declaration was made to be identified.

Can a declaration made by email be regarded as such? According to the advisory board set up to interpret the new Civil Code: “it depends”. The courts must decide on a case-by-case basis, taking into account all the circumstances, whether an agreement concluded by email constitutes a written contract. Thus, there is no clear rule as to whether, for example, a quota purchase agreement concluded by email (for which the Civil Code requires it to be in writing) is valid or not.

What could then be the weight of an agreement made by email?

In the absence of a common position, agreements concluded by email can be classified, for want of anything better, as implied contracts. That is, the email is just one piece of evidence of an agreement between the parties. The actual subject-matter of the agreement between the parties therefore also depends on other circumstances, such as the conduct of the parties before or after the email correspondence. So if we conclude a contract, say, for the delivery of 10 tonnes of goods by email and the supplier only delivers 8 tonnes, which I accept, I may not be able to assert a claim later for the remaining two tonnes. This situation is anything but reassuring considering the fact that we conclude contracts by email on a daily basis.

But there’s something new...

The legislature threw a stone into this somewhat murky stagnant water a few months ago. Albeit only with regard to in-company communication, but also in response to the expectations created by social distancing, a government decree recently stated that communication between a company and its private-individual members can now be conducted by email, and thus such an exchange of communication is equivalent to being in writing. In other words private-individual members in a company can now cast their votes by email at their general meetings, and this will still be considered a valid vote. It is comforting to see that practical needs can override the theoretical polemics of contractual law. And, indeed, this rule is certain to remain with us until 31 December 2020, even after the end of the state of emergency. What will happen to it afterwards is anyone’s guess.

But does one swallow make a summer?

The jury’s still out as to whether legitimating emails between the company and its private-individual members will lead to further change in contract law. Will it, for instance, eventually be possible to conclude a loan contract by email? Or enter into a maintenance contract while sitting in front of the computer, or stipulate a penalty – all these are required to be in writing. One thing is clear: legislators will have a hard time trying to squeeze the genie back into the bottle and will need to line up forceful arguments if they are to reverse this process, which for the time being only affects email exchanges between companies and their members.

By Ágnes Bejó, Senior Attorney, Jalsovszky

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

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