How to sign your contracts digitally & guaranteed legally valid

Confusion still reigns: Different, often very similar, terms such as written form, writtenness, freedom from form, handwriting cause confusion when it comes to handling contracts. For this reason, unfortunately, people often still resort to pen, paper and cumbersome postal channels when there is something to sign.

In this article, we will clarify for which use cases the digital signature is 100% legally valid and the highest probative value and traceability can be guaranteed. Small "spoiler": There are only very few exceptional cases where the electronic signature is not allowed. Otherwise, the digital signature process "trumps" the analog signature in every case due to technical unforgeability and the very highest probative value.

What is the function of contracts?

Basically, it is obvious: By signing a contract, all parties involved agree to the conditions and obligations set out in the contract. Signing a contract ensures that all parties to the contract fulfill their obligations and that their rights and interests are protected. In addition, in the event of a conflict, a signed document can serve as evidence and help to stand firm in court. The most efficient way to sign off on contracts is to do so digitally.

Regardless of whether analog or digital: What does freedom from form mean for contracts?

In European countries, contracts are generally valid without a prescribed form. This means that there are no regulations regarding the way in which contracts must be signed. For example, electronic, written or even oral form is permissible (cf. Section 883 ABG). Ultimately, the contracting parties themselves can agree on a specific type of signature.

For informal contracts, there are no legal requirements on how to sign, but for many business purposes, caution is advised! It would be a fallacy to sign important agreements that are not subject to any form requirement with a low electronic signature standard. If there are contracts with high negotiation sums or high liability risks, a high digital signature standard should definitely be used.

Some contracts require the written form by law.

For certain types of contract, the protection of one of the contracting parties is of particular importance, which is why written form is required by law. In legal terms, this is referred to as the written form. In order to fulfill the written form or writtenness, a handwritten signature of both contracting parties is required by law. In Austria the written form is regulated in § 886 ABGB, in Germany in § 126 paragraph 1 BGB.

Here is the good news anchored in the law: According to § 126a BGB (DE), the legally required written form can be replaced by electronic form, unless otherwise stipulated by law. In general, the eIDAS Regulation, which has been in force throughout Europe since 2016, regulates the technical and content requirements for e-signatures.

If "written form" is specifically required, the qualified electronic signature (QES) can be used for legally compliant signing.

It is therefore important to understand that the terms "written form" or "writtenness", which tend to imply handwriting and paper, by no means exclude digital methods. The digital signature can be 100% equivalent to "handwriting".

The last will. In rare cases, only a "wet signature" is sufficient.

It is only necessary to apply a handwritten signature for the conclusion of contracts and the signing of documents if this is expressly (!) required by a legal provision or a contractual provision between the parties.

In addition to some inheritance law documents such as wills (which must even be handwritten) and some other notarial acts, there are some prominent examples of document types, especially in human resources, which by law may only be signed by hand.

One example is the termination of employment by notice or termination agreement § 623 BGB in German (!) law. No form of e-signature can replace the written form in this case; this is because electronic form is expressly excluded by law under § 623 BGB.

A major step backwards in German digitization policy was recently the subject of controversial discussion in many media outlets. Since 1995, employers in Germany have been required by the Verification Act (NachwG) to record the most important contractual terms in writing and hand them over to the employee for signature: The transcript of essential terms and conditions of employment (§2 NachwG). Although the EU Directive (eIDAS Regulation) permits electronic transmission, in Germany it is not permitted to provide evidence of the essential terms of the contract in electronic form. Even a qualified electronic signature does not meet the requirements of the Nachweisgesetz.

Our personal assessment: It will only be a matter of time that digitization offensives, which are particularly necessary in human resources, will also positively influence the legislation and very soon the law on proof will also be adapted again.

Moreover, even for this special case, there are already "workarounds" to limit the amount of paper and time spent as far as possible and to keep media disruptions to a minimum. This works, for example, thanks to additional documents that are signed analogously in accordance with the law, but a digital copy is still managed and stored centrally in the digital archive.

No risk at all: Sign digitally and in accordance with the required formal requirement.

Regardless of whether analog or digital, national legislation regulates in the first place whether and how a contract is subject to a formal requirement. Once you have an overview of this and have decided to take the digital, time-saving route, the eIDAS Regulation (Electronic Identification, Authentication and Trust Services) takes effect in all EU/EEC member states as a valid framework. This legal framework should drive the digital transformation throughout Europe, enable business processes without media discontinuity, and enable secure electronic processes between 28 individual markets.

A large part of eIDAS regulates secure digital identity and secure electronic signature topics. So if, as mentioned before, an electronic signature is not decidedly excluded by national laws, contracts can be signed according to the guidelines of eIDAS. The regulation basically distinguishes between three types of electronic signatures: simple, advanced and qualified.

It is important for all business operators to have a good overview of the contract processes in the company in order to decide which signature standard is the right one for which contract process.

In detail, we recommend reading our overview article on signature standards. In combination with this article, you will be able to decide which of your contracts you should sign with which standard.

Here is a common example from practice for a non-legally valid signature:

Example e-mail: Decisions that are executed as text in a mail are subject to written form in order to be legally valid. This means that a written signature must be affixed by all parties to the contract. Here it is often the case that insufficient digital signatures are applied. The following procedures are not legally valid:

• Print, sign, scan again, send (media disruption).
• Placing an image of a signature on the e-mail document (simple electronic signature)

Only the qualified electronic signature would be the legally valid method in this case.

Conclusion

Despite any digitalization offensives and new methods of doing business paperless, we are convinced that the signature will always be an essential part of decisions and approvals of all kinds. Accordingly, it is a prerequisite, especially in the professional sector, to know that security and conformity are guaranteed.

This is where the strength of digital signature platforms such as sproof sign becomes apparent: The technically complex processes are handled in the background. For the qualified electronic signature, for example, you only have to identify yourself once. The platform guides you through the 10-minute process.