Signing Documents in Times of Covid-19

A modern interpretation of the writing requirements under the Swiss Code
of Obligations

By Christiana Fountoulakis (Reference: CapLaw-2020-16)

1) Home office and signatures drawn on the iPad

The pandemic caused by the coronavirus imposes social distancing at all levels, including in the world of business. Telecommunication has become more important than ever: video and telephone conferences, e-mail and messenger services like Slack or WhatsApp are the indispensable means the business world relies on. 

Legal services are continuing, despite the standstill of court and debt collection periods. As the case may be, they become even more numerous in view of the crisis: to current offers, contracts, or briefs in arbitration proceedings one might further add terminations, deferrals, granting of loans, assignments, etc.

Some of these transactions are subject to form requirements and must be signed by the parties who undertake to be bound. Article 14(1) of the Code of Obligations states in this regard that “[t]he signature must be appended by hand”. The idea, originally at least, underlying that rule is that the contract is drawn up on a physical medium and that the parties “put pen to paper”, as the expression goes, so as to ensure a certain solemnity. 

Where the form-bound act is a contract, the procedure presupposes either the signing of one single document in presence of both parties’ representatives or, in case of consecutive signing, the printing and dispatching of multiple documents, until all parties possess a signed copy of the contract. It is a somewhat cumbersome, time-consuming and, as the case may be, costly procedure, not only in times of the Coronavirus. 

For a while now, technology has found ways to avoid such lengthy back-and-forth sending of paper documents. Virtually every type of computer hardware allows for the installing of (pretty basic) software that offers the possibility of applying digitally a “handwritten” signature to electronic documents. The advantage of these signature methods is that they are extremely easy to use and can be done from almost anywhere, provided that a smartphone or computer is available. In times of home office, many a lawyer has switched to iPads with handwritten signature on the iPad-Pro, for example, using the existing .pdf version of contracts with the “iAnnotate” programme and the “flatten” function to ensure durability. Another option is to use one’s signature, previously affixed on a piece of paper that has then been scanned and saved as a text or images document, by copying it on the document requiring the signature. 

I will refer to the methods just described as “digital” or “digitally applied” signatures, for in Swiss law the term “electronic signature” is reserved to asymmetric cryptography as defined in the Federal Act of 18 March 2016 on Electronic Signature (FAES (Bundesgesetz über Zertifizierungsdienste im Bereich der elektronischen Signatur und anderer Anwendungen digitaler Zertifikate, ZertES)). Whereas the “electronic signature” is considered as functionally equivalent to a handwritten signature (see at 2) below), the situation is less clear as regards the methods of “digitally applied” signatures (see at 3) below). I argue in the following that these digital signatures too should be deemed to fulfil the requirement of a written and signed communication to the extent they are applied on a change-resistant electronic document.

2) The authenticated electronic signature

a) Mode of operation

Article 14(2bis) of the Code of Obligations states that the equivalent to a handwritten signature is the so-called authenticated electronic signature, provided it fulfils the requirements of the FAES. The electronic signature is based on a system of private keys (ensuring the signature) and public keys (intended to “verify” this signature) to guarantee the identity of the person who signs. To be valid, the electronic signature must be based on a certificate “from a recognized certification service provider” and, since 2017, needs to be “authenticated” in the sense that it is time-stamped, which makes it possible to establish the moment of creation of the signature and to fight against computer attacks and fraud.

According to the Swiss legislator, all transactions for which the law requires the written form may be concluded electronically if they bear such an authenticated electronic signature. There are a few exceptions to this principle, for example in relation to bills of exchange and cheques, where replacement of the handwritten signature by other means is excluded.

b) Measures taken by the Federal Council in view of the covid-19 crisis

In times of government-imposed home office, and as the qualified electronic signature is meant to be the “digital equivalent” of the handwritten signature, the Federal Council has reacted quickly in order to facilitate the conclusion of form-bound contracts by way of the Internet. The Federal Council has thus temporarily modified the Regulation on electronic signatures (Verordnung über Zertifizierungsdienste im Bereich der elektronischen Signatur und anderer Anwendungen digitaler Zertifikate): So far, a person intending to use an “authenticated electronic signature” had to personally present him- or herself at the authority providing the cryptographic keys. In Coronavirus times, identification “may be established in real time by means of audio-visual communication” (article 7a of the Regulation). This possibility, hitherto restricted to the financial sector, will exist for six months counting from the 1 April 2020, unless the social distancing measures taken because of the pandemic are lifted earlier.

c) Weaknesses of the authenticated electronic signature

Whether the action taken by the Federal Council is prone to enhance the notoriously low popularity of the electronic signature in Swiss law must be doubted. 

First of all, the scope of application of cryptographic signatures remains limited in terms of private law because corporate entities and foundations cannot use them: although the new version of the FAES has introduced a so-called electronic stamp for legal persons and authorities, intended to allow their identification in electronic communications (cf. article 2(d), article 8(1) FAES), article 14(2bis) of the Code of Obligations) does not recognise this stamp as an equivalent to the handwritten signature.

Second, the current electronic signature overshoots the target of protection that the legislator wishes to guarantee by requiring, for certain transactions, a handwritten signature. The purpose of such handwritten signature generally is to provide for legal certainty, to ensure the identity of the person making the commitment, and/or to prevent that person from acting hastily. Of course, the electronic signature guarantees all this, and to a much larger extent than the handwritten signature. Its current authentication process is arguably much safer than the handwriting requirement. But does this not show that the current electronic signature system cannot really be called the “equivalent” of a handwritten signature? The law provides the hand signed document as the least rigorous form requirement; transactions that are considered particularly risky or important, such as the foundation of a company, are subject to the notably stricter form of notarisation (public authentication). By requiring – to the extent it does – a mere handwritten signature, the law thus presumably does take into account that the protection the signature offers in terms of authenticity is not infallible

Third, and this is arguably the most important point, the electronic signature is quite impractical for international business transactions. First of all, and as previously mentioned, the electronic signature is based on a so-called authenticated certificate, which the applicant must obtain from an accredited provider by means of an identification procedure. That certificate is personal and can only be used by the applicant. Consequently, in a company, all employees with signing authority must acquire such an authenticated certificate; there is no possibility of obtaining one single certificate that could be stored on a server and made available to all the employees concerned. Furthermore, the electronic signature only allows for one’s own signing. The contractual partner who is also to sign must possess his own electronic signature. However, one major problem is that the requirements for an electronic signature are not
standardized worldwide. The Swiss FAES only regulates the Swiss electronic signature. It is an “island solution”. If one wants a business partner domiciled abroad to provide an electronic signature valid under Swiss law, one must ask him to apply for one in Switzerland. In fact, foreign electronic signatures are not automatically recognised, for this would require the existence of international agreements none of which currently exist. It is obvious that the identification of the foreign business partner by the Swiss accredited authorities (which are all Swiss companies at present) can be difficult: even if the foreign business partner does not have to appear in person during the times of the Coronavirus, he must still communicate with the Swiss certificate provider by video and the latter must control the authenticity of his passport, which is not easy with foreign identity documents. The electronic signature of Swiss law is therefore currently a means that hardly meets the needs of international legal business.

3) Digitally signed change-resistant documents

a) Hand-written signature – a flexible regime 

The Swiss rules requiring the handwritten signature on the original document have never been very rigorous and have moreover been considerably relaxed in the course of the last decades. In earlier times already, it was held that, where business practice permits, the representative is authorised to sign using the signature of the principal. More recently, it has virtually unanimously been admitted that a telefax of the original document bearing the author’s signature in writing fulfils the requirements of article 13 of the Code of Obligations, arguing that practical considerations and trade usages render such increased flexibility of the law necessary. In a similar vein, most authors consider the transmission of a scanned document bearing the party’s signature as sufficient.

b) “Online” signatures

Text processing programmes have long since gone one step further. Software nowadays offers the possibility of applying a “handwritten” electronic signature to certain documents: a signature drawn with one finger on the mousepad can be saved in the “Preview” software, or a signature can be drawn on a PDF document. The same software also offers the possibility to save a photo of a signature on paper or to record a signature on a smartphone screen. Once the signature has been saved, it can be applied to PDF documents with a single click. Similarly, it is just as easy to sign a document with a pen on a smartphone or tablet touch screen. A signature can also be generated using software such as Photoshop, to name but one.

These processes are not only very simple, but above all make it possible to sign completely dematerialized documents. For example, a letter or deed could be written on a word processor, converted into PDF format, signed and dispatched electronically. In one way or another, these signatures are all handwritten by the author, either directly or by means of an instrument such as a mouse. 

These signing procedures are thus easily covered by the scope of article 14(1) of the Code of Obligations, which requires that the signature be “appended by hand”. The fact that the means by which the signature is set is not a conventional pen cannot be of any relevance, since it has always been undisputed that the kind of device one uses for signing does not matter, as far as it is suitable for that purpose. Remains the fact that the record is on an electronic, non-physical file. However, the electronic data carrier is no longer an obstacle to admitting that the form requirements for a “written document” are fulfilled: if the doctrine considers it sufficient for a signed original document to be scanned, saved as an electronic file and sent, it has clearly abandoned the requirement for a physical data carrier.

c) Use of a scanned signature

One can go even one step further and allow for the use of a “scanned signature”: the author of the document inserts an electronically stored signature into the text of an electronic document that is then sent as an attachment to an e-mail. In our view, such a way to sign fulfils the requirement of a handwritten signature, as does the “online” signature. The (only) notable difference is that, in the first case, the author of the document has signed “in advance” and not at the very moment of the conclusion of the act in question. Nonetheless, the signature is his, and it has been “appended by hand”. This is also the reason why that signature is not a “facsimile” within the meaning of article 14(2) of the Code of Obligations: it is not a mechanical reproduction of one’s signature, but rather the signature itself. The fact that the scanned signature does not sign the document “live” but that the signature has been appended at some earlier point in time cannot be of importance. In fact, the situation is comparable to a blank signature, where a party signs a document that still has essential parts to be added. The validity of a blank signature is nowhere doubted, and the same must hold true in respect to the scanned signature.

d) Digitally appended signatures are functionally equivalent to the
handwritten signature

Online signatures and scanned signatures are functionally equivalent to the handwritten signature because they guarantee the same purposes the legislator pursues when requiring – traditionally – a handwritten signature. They confirm the content on the (electronic) document (purpose of evidence). They fulfil a warning function by making the undersigning party realise, at the moment it signs online or affixes its signature, that it is committing itself to the transaction. Finally, they enable attribution of the rights and duties arising out of the signed transaction to the undersigning party. Obviously, legal writing requirements cannot assure all those functions alone, especially not the last-mentioned one. The rules on the writing requirement are read together with the rules on authorisation, commercial and private powers of attorney, etc., and they are complemented by penal law putting under sanction the falsification of documents, including the unauthorised use of a signature. These complementary rules do also apply where the signature is not handwritten but appended, or affixed, digitally. In other words, it is in combination with the other existing rules of private (and penal) law that digitally applied signatures can perfectly serve the same purposes as the handwritten signature.

4) Conclusion

“Digital signatures” on digital documents fulfil the writing requirement of articles 13 and 14(1) of the Code of Obligations. They are signatures appended by hand that guarantee, (at least) to the same degree as a traditional handwritten signature, the purposes pursued by the legislator, that is, evidence, protection of hasty transactions, and identification of the party assuming the rights and duties of the transaction. 

It should however be noted that the Federal Tribunal has not yet had the occasion to express itself on the matter. For the time being, parties signing “digitally” where writing requirements are imposed by the law are thus running a certain risk. 

Obviously, there is no such risk where it is the parties themselves who have agreed on a form reservation, be it because they do not want to be bound earlier than the corresponding contract is available in the agreed form, be it because, for purposes of evidence, they wish to adhere to a certain form (article 16 of the Code of Obligations). The parties can agree on any kind of form requirement, which of course includes a “digital signature” on a digital document.

Christiana Fountoulakis (