Some legal issues pertaining to entering digital contracts

In the context of globalization, when free trade conventions take effect, Vietnamese enterprises will have more opportunities for business, investment, cooperation, and so on. However, aside from the positive impact, there are the difficulties that Vietnamese enterprises must face in the process of integration, one of which is the technological issue. This challenge requires businesses to apply digital transformation in their operations comprehensively, from business operations to management activities, from technical systems to legal issues, and so on. Entering into electronic contracts is a step forward in the digital transformation process of enterprises. According to the provisions of current Vietnamese law, specifically the Law on E-Transactions 2005, an electronic contract is defined as “the use of data messages to conduct part or all of a transaction in the contracting process”6. According to this law, data message is information created, sent, received and stored by electronic means7. 

Digital contracts

1. Method of entering into an electronic contract

Pursuant to Clause 2, Article 36 of the Law on Electronic Transactions 2005, executing an electronic contract may be implemented through the use of an electronic message to request and accept the conclusion of a contract. To ensure the process of concluding and performing an electronic contract, the law also stipulates that an electronic message has the same validity as a text if certain technical conditions are met8. Accordingly, electronic exchange has the same legal value as the traditional in which exchanging information via hardcopies is prevalent. 

The process of entering into an electronic contract is simple, starting with the sender initiating a data message in compliance with the provisions of law as prescribed in Article 16 of the Law on E-Transactions 2005 and sending it to the recipient via electronic means as agreed by both parties (if any). When receiving the data message, the recipient can confirm it through the use of an electronic signature that has been certified by the organization providing the digital signature authentication service10. In the process of entering into an electronic contract, the parties must adhere to the provisions of the Law on E-Transactions 2005 and relevant laws, as well as the provisions of the contract law. 

One of the important notes is that the exchange of information by electronic means is only considered valid when the address used for the exchange is the one that the two parties have agreed upon, if the address is used by a party other than the original agreed address but without notice to the other party, it will not be considered valid. 

2. Electronic signature

According to the provisions of the Civil Code 2015, contract formalities include electronic contracts, so the provisions of the Civil Code 2015 on contracts still apply. According to Clause 4, Article 400 of the 2015 Civil Code, “The time of entering into a written contract is the time when the last party signs the document or by another form of acceptance shown in the document”, so there are no requirements that signature must be a live signature or prohibiting the use of electronic signatures. Therefore, electronic signatures are still legally valid under the provisions of the Civil Code 2015 and the Law on E-Transactions 2005. There are three common types of electronic signatures: digital signatures, scanned signatures, and image signatures. According to the law, only the digital signature specified in Clause 1, Article 24 of Decree 130/2018/ND-CP is a form of electronic signature. In terms of image signatures and scanned signatures, they are not specified in the Law on E-Transactions 2005, Decree 130/2018/ND-CP, and Decree 52/2013/ND-CP; hence, they are not automatically electronic signatures. However, electronic contracts entered into by these two types of signatures are not automatically invalid because there is still no clear regulation to exclude these two types of signatures.  

It is because the legal policy is unclear in the regulation of electronic signatures that has led to many disputes, when the these two types of signatures, that have not been determined according to the provisions of Vietnamese law are electronic signatures or not, are used in electronic contracts.  

3. Notarization and authentication of electronic contracts 

According to civil law, the electronic contract is still considered a form of contract, so the notarization and authentication still apply in this case. Although Article 63 of Decree No. 52/2013/ND-CP has regulations on the authentication of electronic contracts, it is general and unclear. Besides, the Law on Notarization 2014 has not mentioned the notarization of electronic contracts or transactions. Because of such regulations, an issue incurred for an electronic contract is that the parties to the contract can completely exchange and negotiate contract content and sign it remotely via electronic means; if there is a request for notarization, can the notary public notarize and how do they carry it out? 

In fact, some legal documents still uphold and consider notarization and authentication as mandatory regulations, so the issue of notarization for electronic contracts may cause disputes over contract validity, which can not be guaranteed in formality. 

 

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Contract Drafting and Reviewing and contact our team of lawyers in Vietnam via email info@apolatlegal.com.

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