Coronavirus emergency is forcing companies to start not only maximizing sales through their eCommerce channels, but distance contracts and electronic signature become crucial for any part of their business.
The digitalization of any business needs to speed up as a consequence of Coronavirus emergency that obliged the majority of governments worldwide to adopt lockdown rules. Such a circumstance forced many companies to reinvent their business, making distance contracts crucial for both
- the management of sales, with eCommerce channels that become a significant source of business, also in regulated sectors such as the finance and insurance sectors and
- the performance of M&A and finance transactions.
But to ensure that the activities above do not trigger risks for the business, it is necessary to know the limitations and options applicable to distance contracts and electronic signatures. Below I cover some of the aspects relevant for the execution of distance contracts
1. A point and click might not be sufficient for eCommerce contracts
I already discussed in a previous article (“Coronavirus does NOT stop eCommerce in Italy“) the opportunities raised by eCommerce since Coronavirus lockdown rules do not apply to it as well as to the related packaging and delivery services.
Several clients are rapidly investing in their eCommerce site. But they should know that the execution of a distance contract raises issues in countries like Italy where the approval of one-sided clauses requires a second written signature, through the so-called “double execution“. Otherwise, these clauses would not be enforceable against the counterparty.
According to a recent decision of the Court of Appeal of Naples relating to eBay, the requirement of the “double execution” does not apply to eCommerce contracts like eBay’s. But it is an isolated decision, and my recommendation is to
- list the one-sided clauses at the bottom of the agreement and
- ask users to provide a second acceptance by clicking a tick box close to the list of one-sided clauses, after having collected their details and possibly verified their email account through a confirmation email.
2. For finance and insurance distance contracts, a digital or qualified electronic signature might be necessary
Italian law requires that finance contracts are in written form, while insurance contracts need to be proven in writing. The eIDAS EU Regulation provides that only a qualified electronic signature shall have the equivalent legal effect of a handwritten signature at all times, and Italian law extends the regime to also digital signatures.
A qualified and a digital signature require compliance with stringent technical standards and are issued only after that the identity of the holder is certified either by a public official or through distance means that are considered to be equivalent.
Other types of electronic signature, including the scanned copy of the handwritten signature or a point and click, have an evidentiary value that is subject to an evaluation carried out by a court on a case by case basis which means that it would increase the risk of challenges to the business operation.
However, it is also essential to assess how many digital/qualified electronic signatures are necessary to close the transaction. Indeed, for instance, finance contracts are usually associated with insurance coverage and require to execute many compliance-related documents. The possibility to use a single signature for all these documents needs to be assessed based on the peculiarities of the case.
3. The digital signature of the public notary can validate public deeds and M&A transactions
Mergers and acquisitions require the form of the public deed. Italian law provides that in case of public deeds and authenticated private agreements, the parties may execute it through a digital signature (or other electronic qualified signatures) as well as through any other type of simplified electronic signature (e.g., a point and click or the scanned copy of a handwritten signature). Indeed, in such a case, the parties’ signature will be – in the final instance – certified by the public notary who will execute the document with his digital signature confirming the authenticity of signatures placed at his presence, which might be met through a video call.
Moreover, a recent change of Italian law due to Coronavirus emergency clarified that also the following corporate deeds could be executed through the type of electronic signature that is the digital signature of the public notary: (i) transformation deeds, (ii) merger deeds; (iii) de-merger deeds; (iv) deeds regulating the transfer or the use of a going concern (or a part of the same).
The consequence of the above is the possibility of having a remote closing of M&A transactions thanks to electronic signature, which are an exciting opportunity during the Coronavirus lockdown period.
On the topic above, you may find interesting, “How eCommerce changes with new consumer and privacy regulations?“.