Ever wondered if that e-signature your customer just placed under an important sales contract is really binding? This blogpost will give you a practical overview on how to use e-signatures correctly under Swiss law.
We are big advocates of e-signature solutions ourselves and use them in our everyday practice whenever possible. However, there are a few key points you need to consider if you want to e-sign your contracts and ensure they are equally binding as ink signatures on a paper document.
In a nutshell, two points are important to validly conclude contracts using an e‑signature: First, you need to know the specific formal requirements of the contract you want to sign (if any). Second, not all e-signatures are created equal and ‘qualified’ e-signatures are as good as ink signature, whereas most e-signature solutions do not meet the ink signature standard.
1. Formal requirements
1.1 Formal requirements imposed by the law
Under Swiss law, a contract is a mutual expression of intent between the parties. Depending on what type of contract you want to conclude, the law imposes requirements on how that mutual intent must be expressed.
The type of contract refers to the content of the contract, e.g. an employment contract or a sales contract. The how is what we call formal requirements. There are four different types of formal requirements:
- Freedom of form: The general principle is that contracts can be concluded without any specific form. It therefore doesn’t matter if you express your intent e.g. on a piece of paper, in an e-mail, orally during a conversation or using standard e-signatures. However, for accounting and evidentiary purposes, text form is highly recommended.
- Simple written form: Certain types of contracts must be concluded in simple written form, meaning the mutual intent must be expressed in writing and requires the signature of all parties. This includes ink signature and qualified e-signatures.
- Qualified written form: With qualified written form (not to be confused with qualified e‑signatures), extra requirements are added to the existing requirements of the simple written form. These cases are rare: For example, if a landlord wants to terminate a lease of residential premises, he or she must use a specific notice form approved by the Canton.
- Notarization: Lastly, some contracts require you to get a stamp by a notary.
Tip: The vast majority of contracts can be concluded in any form, including e-signature, under Swiss law.
1.2 Formal requirements imposed by the parties
Now the formal requirements set out by the law are only one side of the coin. The other side is what the parties have agreed to when it comes to formal requirements. The parties are free to agree on a stricter form than imposed by the law, but not vice-versa.
If two parties have an ongoing business relationship, e.g., for the regular purchase of crude oil, the principle of freedom of form applies and no specific form is required by law. Nevertheless, businesses often establish ground rules on how a binding order can be made and may exclude orders via telephone or e-mail. Also, beware of form requirements for notices under an agreement: Often, the termination notice requires a written letter to a specific address.
For agreements with a strict form requirement on the other hand, e.g., a real estate purchase agreement which requires notarization by law, the parties cannot agree on a simpler form and have to stick to the legal requirements to ensure the contract is binding.
Also note that the agreement of the parties on a stricter form does not necessarily have to be explicit. If you repeatedly conclude simple sales contracts – which don’t require a specific form by law – in simple written form, this might be deemed as an implicit agreement that future sales contracts must also be concluded in simple written form.
Tip: Pay attention to form requirements in contracts. To facilitate e-signatures, you can agree that ‘in writing’ includes e-signatures or simply require ‘text form’ instead of written form which includes e-mail and text messages.
2. Types of e-signatures
There is no common definition as to what exactly an e-signature is and there are many providers that offer different e-signature solutions. However, when it comes to legal requirements, you can differ between two types:
- Qualified e-signature: Qualified e-signature solutions have to meet certain technical criteria set out by the law and the provider has to be officially accredited. For you to use a qualified e‑signature, you need to undergo a registration process with a provider and verify your identity. This is quite cumbersome and probably the reason why the qualified e-signature has not yet gained a solid foothold in practice. The qualified e-signature is equal to simple written form / ink signature.
- Standard e-signature: All other e-signature solutions can be summed up as standard e‑signatures. Generally, we are talking about any kind of solution that lets you sign a digital document in a digital manner – think about signing a PDF with your mousepad, your apple pencil or inserting a readily made digital signature under the document. Popular solutions include e.g. DocuSign or the signature function of Adobe Acrobat.
Tip: Up until now, providers of qualified e-signature solutions had to verify your identity in person during the registration process. In light of the COVID situation, the law has recently been amended so the providers can now verify by means of video communication in real time. This might breathe new life into qualified e-signatures solutions!
3. Bringing the pieces together
We have established that firstly, you need to check what formal requirements exist for the conclusion of your contract, be it by law or by agreement between the parties. Secondly, you look at what kind of e-signature you are using. Bringing those two pieces together, the following table gives you an overview of what combination works and what we recommend in practice:
| Formal requirements | E-signature solution |
|---|---|
| Freedom of form Most notably: Simple sales contract, agency contract, loan agreement, power of attorney and many more. | Both standard and qualified e-signature solutions can be used. Recommended in practice: Standard e‑signature for easy every day-use, ink signatures only if the counterparty demands it. |
| Simple written form Most notably: Assignment of claims and shares, various provisions of an employment contract (not the employment contract per se though). | Qualified e-signature solutions only. Recommended in practice: Ink signatures or qualified e-signature (such as Skribble). |
| Qualified written form (rare) E.g.: Termination of a lease of residential or commercial premises by the landlord, drawing up a patient decree or a holographic will. | Qualified e-signature solutions might be possible on an individual basis. Recommended in practice: Ink signatures. |
| Notarization | No e-signature solution can be used. |
Tip: Recent legal doctrine argues that most standard e-signature solutions should also be validly useable for contracts that require simple written form. However, until now the topic remains undecided by Swiss courts. Although we also support the newer approach, there is a high degree of risk when concluding such contracts by means of standard e-signature and we therefore do not recommend it.
Conclusion
To sum up, the vast majority of contracts under Swiss law can be concluded using a standard e‑signature solution. Notable exceptions in practice are the assignment of company shares and certain clauses of the employment agreement (extension of probation period and certain IP clauses) – or whenever you and your counterparty agree on a specific form. In that case, ensure you use ink signatures (and actually store the original) or opt for a qualified e-signature solution such as Skribble.
