In the context of digitalization, electronic contracts are becoming more and more popular. There are many platforms that allow you to execute contracts online. The question arises: what are the legal force of such agreements and signatures?
There are several approaches to the form of certification of such agreements in the world, of which 2 can be distinguished in a very generalized way:
– any electronic signature (e-signature) is enough to conclude an agreement, which is considered concluded until the party disputed the fact of its conclusion;
– an electronic signature (e-signature) is recognized in any form, but a qualified signature is preferable, and in certain cases mandatory.
The second approach prevails in Ukraine.
According to the provisions of the Laws of Ukraine “On electronic trust services” and “On electronic commerce” electronic signatures are not improved, improved and / or with a one-time identifier, qualified. The difference between them lies in the way the signer is identified and the degree of protection of such a signature.
Accordingly, a simple electronic signature (not improved) can be done as a simple scan of the signature or a “tick” in the signature section (variations may be different, an example is given for understanding). It is better not to use this type of electronic signature for significant transactions. However, if the two sides will sign an (or with the use of a qualified digital signature) agreement on the use of digital signatures, it will avoid misunderstandings and disputes concerning the use of this type of signature (Art. 12 of the Law of Ukraine“On Electronic Commerce“.
The advanced digital signature is a special method for the identification of the signatory and ensures the protection of the free expression of the will of such a signatory. At the same time, we are not talking about a special form of signature encryption by authorized certified institutions, but only about the services that are provided by the platform on which the contract is signed. As in the case of the unimproved electronic signature, the Law requires a paper agreement on the use of the improved digital signature by the parties (except for the electronic signature with a one-time identifier).
An electronic signature with a one-time identifier (hereinafter – “EPOI”) software is essentially a type of advanced digital signatures, although the Law of Ukraine “On Electronic Commerce” is not naming it that way. Its essence lies in the use of one-time messages (passwords, codes, confirmations) by telecommunication means. Most often, SMS, messages in instant messengers are used as confirmation of the will of the signer. EPOI is widely used, for example, in the field of microcredit. The validity of the conclusion of contracts in this way has already been repeatedly confirmed in the judicial practice of Ukraine: Resolution of the First Judicial Chamber of the Civil Court of Cassation of the Supreme Court in case No. 524/5556/19; The ruling of the Kiev Court of Appeal. However, EPOI can only be used in the field of electronic commerce, as defined by the Law “On Electronic Commerce“, and is not allowed for use in relations with government agencies, in notary, gaming, etc. At the same time, since a one-time identifier (SMS) comes to a phone number that may not belong to the signer (if the phone number is “not contractual”), judicial practice takes into account the data of registers, other open registers, which make it possible to confirm that the corresponding number the phone is used by this particular person. As in previous cases, the parties can sign an agreement on paper to use the EPOI for further transactions.
A qualified electronic signature (hereinafter referred to as “CEP”) differs from other signatures in that it is generated, verified and controlled by specially certified (state) institutions. These can be certain centers (Diya, the Center for Certification of Keys “Ukraine”, the Ministry of Internal Affairs of Ukraine and others), as well as banks (JSC CB “PrivatBank”, JSC “Ukrsibbank”, etc.). A detailed list can be found at the link. Only this type of electronic signature can be used when submitting reports to the tax authorities as well as in the preparation of primary documentation (see Art. 9 of the Law of Ukraine “On accounting and financial reporting in Ukraine” between business entities. According to part 2 of Art. 17 of the Law of Ukraine “On electronic trust services” CEP is mandatory for documents, the signing of which must be carried out with your own hand.In fact, any contract requires a handwritten signature.
Which digital signature should I use?
According to Part 3 of Art. 18 of the Law of Ukraine “On Electronic Fiduciary Services”, an electronic signature cannot be invalidated, therefore any electronic signature can be used and may give rise to legal consequences. As a consequence, any contract signed with any digital signature cannot be invalidated on this basis. Note: but it can be recognized as not concluded if there are not sufficient mechanisms for identifying the signatory (legal peculiarities, the essence of which: there are risks depending on the details).
The details are important and they are as follows.
CEP is the only type of signature that can be used in government documents and is required to sign documents that require a wet signature. Only the CEP allows avoiding (with rare exceptions) disputes regarding the identification and free expression of the will of the parties. The disadvantage of a CEP is that non-residents most often do not have a CEP, since in order to receive it, one must personally apply on the territory of Ukraine (the situation may change in the future).
EPOI is also a reliable means of signing documents on the Internet (with the exceptions mentioned above), however, it requires the use of special telecommunication systems and software (SMS, etc.). The disadvantage is not such a guaranteed way of identifying the signatory as when using the CEP, because it is not always possible to identify the signatory by the phone number. Also, EPOI is not always convenient to use in contractual relations with non-residents.
Not improved and improved electronic signatures, although they are not invalid, can lead to a dispute about the identity of the signatory. Thus, they will complicate the proof in court of the fact of the conclusion of the contract. This type of signature can be used in Ukraine, but it is better to verify in advance the identity of the second party, and, if possible, sign a paper agreement on the use of an electronic (digital) signature in the future.
The Zilver Law Firm team recommends you carefully check the Terms of Service, public offers on websites, including if you need to go through full authentication using a passport photo or other documents.
If you have any questions regarding the creation, use or appeal of electronic contracts signed using an electronic signature, our team of professional lawyers and lawyers will wait for a call at: +38 050 140 95 60, +38 098 002 78 25, e- mail: firstname.lastname@example.org.
We also offer the following legal advice and sample documents for reading:
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