Overview of electronic signature law and its legality in Germany
As a member of the European Union, Germany accepts electronic signatures as legally valid in business and legal settings. The country first recognized electronic signatures with the passing of the German Signature Law.
The Electronic Identification Authentication and Trust Services (eIDAS) passed in 2016 and electronic signatures became legal across all EU member states.
An introduction to German law
Civil Law Systems
Germany is classified as a Civil Law system but in actuality, its legal model is a mix of Civil Law and Common Law systems. Civil Law systems are derived from Roman Law while Common Law systems originated in the courts of England.
Germany operates under a Civil Law system in regards to:
- Criminal law;
Meanwhile, the country uses Common Law systems when it comes to taxation, insurance, banking, and currency.
Civil Law systems currently make up 65% of the world’s legal systems. These systems are based on codified laws which are routinely revised. While Common Law systems focus on judicial precedents, Civil Law systems focus on a comprehensive set of principles.
What are the electronic signature laws in Germany?
According to the legal framework in Germany, a written signature is not necessary to validate a contract. A contract is considered valid once two legally competent parties agree. This includes verbal, written, and electronic agreements.
Of course, there may be instances where one or both parties need to prove the validity of this contract in court. Under the German Code of Civil Procedures, digital management solutions are an acceptable form of proof that a contract is valid.
Before the passing of eIDAS, every EU member state was required to comply with the eSignature laws in a particular country. For instance, if a German citizen sent a document to a citizen in France, they had to check to ensure that France’s digital signature laws matched Germany’s.
When eIDAS passed in 2016, it established a consistent framework for how electronic signatures are used across Europe. The legal effect is that any electronic document you send from one EU member state to another is safe, legal, and valid. So you can send documents to other EU member states knowing that the eSignature laws are the same.
Under German law, digital signatures are court-admissible and legal for business use. There are a few exceptions which we will outline in more detail below.
Three types of eSignatures
According to eIDAS regulations, there are three different types of electronic signatures. A standard electronic signature (SES) is a signature that is typed or scanned. With this type of signature, there’s no obvious proof of who signed the document.
An authentic electronic signature (AES) and qualified electronic signature (QES) are both trustworthy signatures. According to eIDAS, a QES is legally recognized as being the same as a handwritten signature. But the regulations also state that eSignatures can’t be held inadmissible in court simply for failing to meet the standards of a QES.
When are electronic signatures allowed?
German citizens and service providers can use electronic signatures for the following documents:
- HR documents – This includes employment contracts, onboarding paperwork, temporary employment agreements, non-disclosure agreements, and benefits paperwork.
- Commercial agreements – This includes non-disclosure agreements, purchase orders, invoices, service agreements, and sales agreements between two corporate entities.
- Consumer agreements – This includes retail accounts, terms and service agreements, licensing agreements, invoices, and order confirmations.
- Real estate documents – This includes both residential and commercial real estate agreements.
- Certain patents and copyrights.
Are there times when eSignatures aren’t appropriate?
Yes, electronic signatures aren’t appropriate when there are specific requirements in place stating that a handwritten signature is necessary.
Here is a list of documents that may require wet ink signatures:
- Notarized documents;
- Property transfers or purchases;
- Marriage contracts;
- Wills or inheritance contracts;
- Employee termination notices.
The biggest benefit of using eSignature software like PandaDoc is that it will reduce the time you spend creating and finalizing contracts. You can create new proposals and contracts quickly and have them signed within minutes, ultimately streamlining your sales process so you can close deals faster.