FROM PEN TO PENDRIVE - PART II: CONSERVATIVE CIVIL LAW

15 February 2023

As we pointed out in our last article, the rules on writing set out in the Civil Code are a guideline for all areas of law. Therefore, in our series of articles, we will start the examination of the areas of law with civil law. If we take a look at the judicial practice in Hungary we will see that in civil law, compared to other areas of law, there is a stricter approach and that text-based communication often does not meet the legal criteria of written form in civil law .

The previous part of the article is available here: FROM PEN TO PENDRIVE – NEW SERIES ABOUT E-WRITING IN HUNGARY - Blog - Smartlegal

Civil law rules on contracts often require a written form[1], furthermore, any contracting party can also make it compulsory, even in a GTC, to make all statements in relation to the contract in writing.

A breach of the requirement of written form has serious consequences: if the declaration does not meet the legal criteria of writing, the declaration will be invalid, i.e. it may not have legal effect.

For this reason, it is important to be aware of the requirement of writing in connection with the contracts and declarations in business life.

1. General rules on writing in the Civil Code

According to the Civil Code, the essential content of a legal statement must be in writing[2], and it shall be signed by the declarant[3] in order to meet the requirement of written format.

The Civil Code states that, in addition to the above, the declaration shall be deemed to be in writing even if it

1. ensures the unchanged recall of the content of the statement, AND
2. allows the identity of the declarant to be established, AND
3. allows the date of making the statement to be determined.

Therefore, it is essential that, from a legal point of view, the written form is not the same as recording something in a legible form (e.g. text message), the statement must also certify who made the statement. This means, some form of signature or other means of attesting the identity of the declarant.

As can be seen above, the Civil Code uses a very general, technology-neutral formulation, from which it is hardly possible to determine with certainty which of the everyday text-based communication meet the above legal criteria.

2. Interpretation of the Civil Code rule on electronic writing

Point of view of the Advisory Board

The Advisory Board of the New Civil Code examined whether declarations made by a permanent device, such as e-mail, SMS, chat, where the parties did not use electronic signatures according to the eIDAS[4] Regulation, comply with the requirement of written form.

The majority opinion stressed that the question should always be examined on a case-by-case basis, and that it is possible for non-traditional and non-signed declarations to meet the requirement of written form, since the Civil Code does not require absolute authenticity.

On the other hand, a minority of the board was of the opinion that only a declaration having the formal requirements as provided for in the eIDAS Regulation can satisfy the legal requirement of written form.

The Board agreed, however, that if a law provides for a form of communication which complies with the requirement of written form under the Civil Code, then a legal declaration made in this form should be considered to be in writing.

Thus, similarly to the Civil Code, the Advisory Board did not make a general statement about the suitability or unsuitability of a particular form of electronic communication in relation to the written form, but rather made it the subject of an individual assessment in each case.

Legal literature and practice

In the 10 years since the adoption of the Civil Code, the above situation has not changed significantly, and there are still no "general truths" in civil law regarding the assessment of email or chat communications.

According to the recent Commentary of the Civil Code[5], among the means known and widely used today, electronic mail cannot fully meet the requirements of the Civil Code, because electronic mail does not identify the sender of the letter, but only reveals from whose electronic mailbox the letter originated.

In addition, it can be established that in many cases, Hungarian judicial practice follows the stricter approach, i.e. the court requires at least an advanced electronic signature for written electronic documents. The following decisions also illustrate the conservative approach in the field of civil law:

Court decision number	Facts	Position on e-credibility
Metropolitan Court of Appeal Pf.20435/2017/3.	The plaintiff brought a press correction action against the defendants.[6] The plaintiff's request was sent by e-mail in such a way that the plaintiff's counsel signed the document with a pen, stamped it and scanned it. The court of first instance did not consider the request to be in writing. In its view, although the sending of the e-mail message was verifiable, the fact that it was received by the addressee could not be proved. The plaintiff appealed.	According to the second instance court, a declaration made electronically is deemed to be in writing if it is possible to verify that the requirements of authenticity and forgery have been met and at the same time to identify the date on which the declaration was made. Only an electronic document with an advanced electronic signature complies with these conditions. A request for correction sent by simple e-mail or attached to an e-mail does not meet the requirement of a written declaration.
Pf.20074/2018/5.	As in the above case, the plaintiff sent its request to the defendant by e-mail prior to the press correction lawsuit. The court of first instance dismissed the action for lack of written form.	The court of appeal stated that a simple e-mail outside a closed system (like a bank system), cannot be used to identify the declarant beyond doubt in the absence of a signature, and cannot therefore be considered as written.
Metropolitan Court of Budapest Pf.637988/2019/5.	An e-mail discussion was initiated between the parties to establish a sales contract. The plaintiff, as buyer, sent an offer containing a deposit[7] to the defendant by e-mail, to which the defendant, also by e-mail, sent an acceptance. Subsequently, the defendant informed the plaintiff that the bank had not allowed the encumbrance on the property to be cancelled and had returned the deposit previously transferred to the plaintiff. In his action, the plaintiff claimed repayment of twice the amount of the deposit. The first instance court did not consider the declaration to be in writing and therefore, in its view, there was no prior contract.	The second instance court agreed with the first instance court. It stated that the law requires the contract to be in writing because there is an overriding public or private interest in reproducing the content in a clear and unchanged form that does not give rise to a dispute. Legal and traffic security is served by the interpretation that requires compliance with the legal rules on highly secure electronic declarations in order to record transactions in writing.

In view of the above, in the case of mandatory writing in civil law cases, it is recommended to use those methods, in connection which the judiciary has clear opinion. Regarding electronic declarations, the court proof solution is an electronic document compliant with the eIDAS Regulation.

Even if writing is not mandatory, it is still recommended to use secure methods (paper contract, electronic signature), as the other party may, in case of any contract or declaration, dispute that it has been sent to him. This can be decisive if, in the course of a dispute, the party cannot prove that the statement was known to the addressee, which, as we have seen in the decisions above, is very uncertain in the case of email and other electronic communications.

3. Special rules on writing in the Civil Code

The Civil Code[8] mentions that there are specific requirements in certain areas of law, which are determined by specific rules for that area of law.

A non-exhaustive example of this is real estate law, where new rules in this area could lead to the widespread use of electronic contracting by the parties. There are also specific rules in company law, which will be dealt with in a separate article.

4. Summary

In this article, we have supplemented our previous article by presenting further rules in the field of civil law dealing with the issue of writing and, in particular, e-writing.

In summary, there is a very strict approach to writing in this area of the law and, despite the rise of technology and the popularity of communication via e-mail, public authorities/judicial practice may still require the use of an advanced electronic signature in case of electronic legal statements to meet the criteria of written form.

Given that qualified signature devices are not widely known, but that new forms of contract are on the rise, it will be interesting to see whether the courts will give way to this strict approach in the future.

In our next article, we will look at the area of management of claims.