In the era of information exchange through modern information and communication technologies, it has inevitably come about that commerce, including the making of offers as well as the conclusion of contracts themselves, is conducted electronically. This trend has also been recognized by the legislator, who has regulated, through statutory acts, the rules and conditions for the validity of contracts concluded electronically.

Contracts for Which No Specific Form Is Prescribed

When it comes to contracts whose conclusion is not subject to any prescribed form, i.e. contracts that may be concluded orally, the situation is not particularly complicated.

For example, the Law on Electronic Commerce provides that a contract may be concluded electronically, i.e. in electronic form, and that an offer and acceptance of an offer may also be made electronically, i.e. in electronic form. It is further prescribed that, where an electronic message or electronic form is used in the conclusion of a contract, the validity of such a contract may not be contested solely on the grounds that it was made in electronic form.

Accordingly, where the law does not prescribe that a certain type of contract must be concluded in written form, such a contract may be concluded through electronic communication, including the exchange of electronic messages (via e-mail or other means of electronic communication).

In business practice, the use of dedicated electronic platforms for document signing, such as DocuSign, SignNow, Dropbox Sign, and others, is becoming increasingly common, as they enable simple, secure, and efficient remote document signing.

Written Form of Contract

If the parties wish to conclude electronically a contract for which the law prescribes that it must be made in written form, certain rules must be taken into account in order for the contract to be valid.

Thus, starting from the basic rules of the conclusion of a contract, pursuant to the Law on Obligations, where the conclusion of a contract requires the drawing up of an instrument, one of the possible ways to conclude the contract is for the instrument to be signed by all persons who undertake obligations thereunder. For the conclusion of a bilateral contract, it is sufficient that both parties sign a single instrument.

Another way to conclude a bilateral contract is for each party to sign a counterpart of the instrument intended for the other party. The requirement of written form is satisfied if the parties exchange letters or reach an agreement by telex or by some other means that makes it possible to reliably determine the content and the author of the declaration.

The written form is undoubtedly also satisfied by electronic documents, as the validity, value as evidence, or written form of an electronic document may not be contested solely on the grounds that it is in electronic form.

Furthermore, pursuant to the Law on Electronic Documents, Electronic Identification and Trust Services in Electronic Business, a qualified electronic signature has the same legal effect as a handwritten signature. The validity or value as evidence of an electronic signature may not be additionally contested solely because it is in electronic form or because it does not meet the requirements for a qualified electronic signature.

It is also necessary to consider the distinction between an original and a copy of an electronic document. Namely, an electronic document that is originally created in electronic form is considered an original, and an electronic document that has an identical digital record to the original electronic document is also considered an original.

This would mean that a reproduced copy of an electronic document containing the text of a contract and the qualified electronic signature of one party, which is reproduced with the intention of delivering that document to the other party for signing with an electronic signature, still constitutes an original.

On the other hand, a paper copy of an electronic document is produced by printing the external form of the electronic document. In addition, an electronic document created by digitizing an original document whose form is not electronic is considered a copy of the original document.

Accordingly, the original of an electronic contract is an electronic document containing the electronic signatures of both parties. Two counterparts of the document would also be considered originals if each party electronically signed one counterpart, whereas a scanned or digitized version of a document containing a handwritten signature is considered a copy.

Cross-Border Contracts

The conclusion of an electronic contract in the manner described above is also possible between a domestic and a foreign entity. However, it is necessary to bear in mind that a qualified electronic signature issued by a foreign trust service provider is recognized based on reciprocity with the domestic trust service in the country of the foreign service provider, as regulated by a ratified international agreement. To date, the Republic of Serbia has concluded only a limited number of such agreements, including agreements with North Macedonia and Montenegro.

In practical terms, the above means that if the recognition of qualified electronic signatures has not been regulated by an international agreement with the state of which the party is a resident, its electronic signature would not be considered a qualified electronic signature. Although the value as evidence of such an electronic signature could not be denied solely on this basis, the risk is still not entirely excluded.

Closing Note

As long as the parties are aware of whether the contract they intend to conclude requires written form or not, as well as of the distinction between an original and a copy of a document, and provided that they are technically equipped with an appropriate electronic signature, the rules governing electronic documents and electronic trust services will facilitate and expedite the conclusion of contracts.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.