Conclusion of a distance contract
Tendencies of not tying people to one territorial place, the possibility of remote work, the recent experience with restrictions on movement due to the COVID-19 pandemic, as well as the current tensions that caused the migration of the population and the relocation of businesses from their home countries due to the consequences of the relationship between Russia and Ukraine has increased the need to find ways of concluding distance contracts. The aforementioned circumstances forced business entities to perform business without the personal presence of a person, which opened doubts regarding the form of concluding the contract, which was usually performed by personally signing the document.
Different ways of expressing the will to conclude a contract
According to the Law on Contracts and Torts, a contract is concluded when the contracting parties agree on the essential elements of the contract. The will to conclude a contract, as the decisive element for its creation can be expressed in various ways, including the traditional written and handwritten signed contract, as well as verbal expressions, customary signs, or other behavior from which the existence of the will can be inferred with certainty.
This practically means that most contracts can be concluded by oral agreement, exchange of emails, telephone conversations, and in many other ways that make it possible to maintain physical distance, under the condition that the declaration of will is free and serious. Contracts related to the provision of information technology services are usually concluded electronically, by entering certain symbols in the designated fields, filling in or ticking the questionnaire, or in the form of an electronic contract.
The law does not distinguish the legal force of contracts concluded in this way if there is no doubt about the contractual will.
However, in business, it is customary and advisable that all contracts should be concluded with a written trace in a formal manner so that the provisions of the contract are indisputable and less prone to misinterpretation. Business entities still have the greatest trust in written and handwritten signed contracts.
In a situation where a written document is required to conclude a contract and the contracting parties are unable or unwilling to meet in person, there are different ways for the written contract to be concluded.
Exchange of documents
The contract is concluded when the document is signed by all persons who commit themselves to that document. When exchanging documents, it is sufficient for both parties to sign one or for each party to sign a copy of the document intended for the other party. It is best to exchange the document so that both parties have the original document with the original handwritten signature, but it can also be done by exchanging scanned documents by e-mail or in another way.
In some countries, there are special conditions for concluding contracts remotely and signing contracts without the presence of the other contracting party, which is mainly related to providing evidence that the document is handwritten and signed (e.g. requiring the presence of a witness to the signature). Our laws do not deal with this method of concluding contracts specifically, but it is certainly recommended to collect as much evidence as possible that the contract was concluded, i.e. really hand-signed remotely. To this end, the contract can be signed in front of witnesses in person or via video conference, e-mails can be exchanged confirming that a particular person has signed the document and thus concluded the contract remotely, and similar.
Contracts that require signature authentication, a notarized record, or the solemnization of the document unfortunately cannot be concluded in the ways mentioned above.
Electronic signature and electronic seal
Electronic signature and electronic seal are means of providing additional security in concluding distance contracts following the Law on Electronic Document, Electronic Identification, and Trust Services in Electronic Business. This method of concluding contracts is rapidly increasing in line with the development of information technology.
However, contracts and other legal transactions that require a signature to be certified, publicly confirmed (solemnized), or notarized cannot be concluded in this way, which can be considered a drawback in both regulation and technical solutions of the industry, which is not yet fully ready to open its doors to the possibilities that information technology can offer.
Regarding contracts that require a special written form (such as an employment contract), they can be concluded remotely in electronic form, with the necessary signature using a certificate or electronic signature following the Law on Electronic Document, Electronic Identification, and Trust Services in Electronic Business.
Young doctoral students were among the first to sign employment contracts electronically for jobs on scientific projects at the Ministry of Education and Science.
In our legal regulation, there is a difference between an electronic signature and a qualified electronic signature. While an electronic signature confirms the identity of the signatory of the electronic document, a qualified electronic signature, created by a qualified electronic signature creation device, not only confirms but also guarantees the identity of the signatory, and has the same legal effect as a handwritten signature.
The increasing use of electronic signatures and electronic seals is also contributed by the fact that their validity or evidentiary value cannot be challenged solely because they are in electronic form or do not meet the conditions for a qualified electronic signature. The validity or evidentiary value of an electronic document, as well as the written form, cannot be challenged solely because it is in electronic form.
The legal presumption of preserving the integrity and accuracy of the data to which it is linked applies to a qualified electronic seal.
The use of electronic signatures and seals is on the rise, their application is expected to expand to the conclusion of numerous contracts such as construction contracts, real estate purchase agreements, life support agreements, etc.
Trends in remote business
Information technology has provided solutions for various types of transactions “from the comfort of your own home” and now provides solutions for legal transactions. With the development of smart contracts that monitor the performance of contractual obligations, contract law has gained a completely new dimension. On the other hand, other segments of the business also tend to shift to electronic platforms.
Serbian regulations are trying to keep up with the transition of transactions to electronic platforms, which is why the Law on Digital Assets has been adopted. However, there are still many gaps that need to be regulated, both in terms of regulations and the positions taken by relevant institutions on several practical issues, to primarily ensure the trust of parties in this way of doing business.
Unfortunately, it seems that the profession is not keeping up with and accepting all available IT solutions at the same pace as their development, so currently, according to some research, only about 5% of the potential of doing business using information technology is being used in legal transactions.
It is certainly expected that very soon, handwritten signing of contracts and mandatory physical presence for conducting transactions will be the exception. In that sense, it may be a moment to optimistically look towards the development of technology, whose primary goal is to serve people and be in their function. What seems like a task in this process is to measure the benefit of technology and its adverse effects, and to allow it to improve the quality of business to the optimal extent.
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