Commercial contracts and distant parties: how to sign?
In this moment of emergency, caused by Coronavirus, companies are forced to enter into commercial contracts using alternative means than the "traditional" handwritten signing. One solution is represented by the use of electronic signatures, strong end simple e-signatures, which can speed up the signature processes, providing proof of the exact date and helping companies in the digitalization of their contracts, also for conservation purposes. Before entering into a commercial contract with these new methods, however, it will be necessary to carefully evaluate case by case which type of electronic signature to use and all the relevant legal implications.
The Covid-19 outbreak brought out even more companies’ increasing need to enter into commercial contracts using alternative and more flexible means as opposed to “traditional” handwritten signing. The challenge of going through traditional signing procedures of complex contractual drafts with movement restrictions in place is among the main issues that companies are facing at this time of emergency. In this article we consider some of the practical solutions that companies may embrace in the Italian scenario.
In general terms, the will to be bound to a given contractual relationship can be expressed in various ways under Italian law: by signing a contractual document, by a verbal agreement between the parties, according to a “conclusive behaviour” of the parties who act consistently with the intention to enter into a certain contractual relationship etc.. However, in some instances the written form is required for contracts to be validly concluded, by way of example in the banking sector. Traditionally, the written form can be fulfilled through a handwritten signature, that is unique, unrepeatable and – under certain conditions – may ensure the authorship of a given document.
Although in many cases the written form is not expressly required by law, it is still highly advisable to rely on it in order to provide more certainty to the origin of the signature and to ease the burden of proof in case of claims. This becomes even more relevant as the complexity of the agreement between the parties increases.
If on the one hand the handwritten signature appears to be the safest traditional mode to enter into commercial contracts, on the other hand it is not always viable or functional between distant parties, especially during these times of emergency. This is where electronic signatures (e-signatures) come in. According to Regulation (EU) no. 910/2014 (the "eIDAS Regulation") electronic signatures are “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign”.
The eIDAS Regulation and the corresponding Italian laws (Legislative Decree no. 82 of 7 March 2005, the "Digital Administration Code" or "CAD") stipulate that “strong” e-signatures meet the written form requirement, providing for the following types: the advanced electronic signature (for example, the graphometric signature on a tablet), the qualified electronic signature (which is based on a strong authentication of the signatory, for example through a smart card or token), and the “digital” signature, which is a type of qualified signature provided for by the CAD and requiring encryption. Strong e-signatures together with the “time-stamp” technology can also provide evidence of the exact date on which a certain document was signed.
However, strong e-signatures often require the use of specific technologies and the involvement of "certified" service providers, thus not all companies are yet ready to implement them as an ongoing business practice.
E-signatures not fulfilling the requirements of strong e-signatures are considered as “simple” e-signatures. To the extent that a given contractual relationship is duly formed through the expression of the parties will, simple e-signatures may constitute a valid method for concluding such contract. In case of claims it is up to the court to assess whether the written form requirement was fulfilled or not. Such assessment would concern the measures adopted to ensure the integrity of the document and the factual elements making the simple e-signature traceable to its author. Examples of simple e-signatures are signatures included in emails or in forms used on e-commerce sites. These ways of signing contracts are more frequently used in B2C trades, where contracts need to be concluded quickly and in a simplified manner, without imposing the use of specific technologies on consumers.
The AgID (Agency for Digital Italy) recently issued the "Technical Rules for the electronic signing of documents pursuant to art. 20 of the CAD", which regulate the way in which companies can have their electronic documents signed with the SPID (Public Digital Identity System): thanks to a prior SPID authentication by the signatory, simple e-signatures can be considered equivalent to strong e-signatures.
In addition, the recent Italian emergency legislation (“Liquidity Decree”, Decree Law no. 23, 8 April 2020) allowed bank contracts with retail customers to be validly signed through an exchange of e-mails (simple e-signature), provided that an identity document is collected and that appropriate technical measures for the storage of the contractual document are taken.
E-signatures are always worth to be considered, both where handwriting signatures are not a workable solution and as a permanent replacement of traditional signing processes within businesses. E-signatures are generally capable of speeding-up signing processes, providing evidence of the exact date of the signing, and helping companies in the digitalization of their contracts, also for retention purposes. Strong e-signatures are the best solution on the table, albeit not always viable to due technological constraints. Among all the types of strong e-signatures available, companies should consider which ones meet their needs and assess costs and implications thereof. Simple e-signatures are generally more suitable for B2C trades as they entail simplified procedures, but they are not ideal in B2B relationships envisaging complex agreements. However, in the event that neither handwriting signing nor strong e-signing are possible due to specific circumstances, simple e-signatures may be considered also for B2B relationships. If so, companies should carefully assess on a case-by-case basis what type of simple e-signature to use and all the relevant legal implications.