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26 February 2020
austria vienna

Digital Signatures

More and more companies are using digital signatures to sign their contracts electronically. But is this permissible and are the contracts valid?

Freedom of contract (Vertragsfreiheit) is an underlying principle of Austrian contract law. A contract is defined as consenting declarations of an offer and an acceptance and, in general, neither offer nor acceptance requires a specific form under Austrian law. Moreover, oral agreements are legally binding and enforceable. Contracting parties are therefore free to choose any suitable form for a contract according to Section 883 of the Austrian civil law (Allgemein Bürgerliches Gesetzbuch, "ABGB"), including tools to sign contracts electronically. This possibility to choose is called freedom of form (Formfreiheit), which is part of the mentioned freedom of contract ("Vertragsfreiheit").

There are some exceptions to this freedom of form (Formfreiheit) and a specific form is required by law with respect to certain agreements, such as the "written form". "Written form" or "in writing" within the meaning of Section 886 ABGB means handwritten signature on paper. So whenever statutory law requires written form this means that the undersigning persons must sign the document in their own hand. Signatures need to be appended to the contractual agreements. Examples of agreements which have to be "in writing" are the guarantor's declaration of commitment according to Section 1346 (2) ABGB (Verpflichtungserklärung des Bürgen), the non-remunerated loan agreement without handover of the loan according to Section 984 (2) ABGB (unentgeltlicher Darlehensvertrag ohne Übergabe der Sache) and a limitation agreement according to Section 29 (1) (3) (a) MRG (Befristungsabrede nach MRG).

According to the Signature and Trust Services Act (Signatur- und Vertrauensdienstegesetz), the written form requirement (Schriftlichkeitserfordernis), if replaced by electronic means, is fulfilled by the use of a qualified electronic signature (qualifizierte elektronische Signatur) only. While national courts may or even must accept other electronic signatures as evidence, only a qualified electronic signature may be used if statutory law requires written form.

As parties often agree that contracts or amendments thereto may only be agreed "in writing", this usually refers to Schriftform within the meaning of Section 886 ABGB. Thus a plain e-mail (without qualified electronic signature) is not "in writing" according to the legal meaning of this term.

Using electronic signatures is easier and faster than concluding contracts on paper and a further step towards a higher degree of digitalisation in Austria, but not every type of electronic signature is a suitable tool for every contract. If the wrong type of electronic signature is used to conclude a contract, there is a risk that the agreement may be ineffective. Therefore, caution is warranted when choosing the right electronic signature to benefit from the wide range of advantages they provide.