Are Digtial Contracts Valid?
This is the 17th video of the Investing In China Chapter.
In the realm of cross-regional business transactions, it has become common practice for companies to exchange contracts and orders via digital platforms like email and WeChat. However, a significant concern arises when companies fail to retain original copies of contracts signed directly by both parties. This situation often leads to disputes regarding the legal effectiveness of contracts transmitted through email and similar methods.
According to the provisions of the Civil Code, parties are allowed to enter into contracts using electronic data messages, such as telegrams, faxes, emails, and other tangible forms that represent the content. Unless the contract or the law specifies particular requirements for its validity, such contracts carry corresponding legal weight.
Nevertheless, in practical situations, disputes between parties can cast doubt on the evidentiary value of contracts signed through electronic means. Let's take email contracts as an example:
Firstly, proving the authenticity of emails becomes a crucial factor. Although the law acknowledges email and WeChat chat records as admissible evidence, the potential for email modification and forgery raises concerns about their credibility. Relying solely on an email as conclusive evidence is generally insufficient.
Moreover, difficulties arise in determining the true identities of email and WeChat senders, recipients, and CC recipients. Cases have emerged where one party denies their association with an email address, claiming they never sent or received emails through a specific WeChat or email account. Some even argue that email addresses can be easily falsified. Consequently, establishing the ownership of email addresses becomes a pivotal aspect in such disputes.
To strengthen the legal standing of contracts, the most influential evidence remains the original contract document, signed by both parties. Whenever possible, it is highly recommended to prioritize the signing of paper-based contracts and securely preserving the original copies. In situations where email, WeChat, or other electronic means are used due to special circumstances, I propose the following suggestions:
First, promptly follow up with written contract confirmations after the fact, especially for new clients, significant orders/contracts, and long-term cooperation agreements.
Second, for clients with frequent transactions, consider signing a framework agreement that explicitly outlines contact persons, addresses, phone numbers, email addresses, WeChat, WhatsApp, and other relevant contact information. This ensures that the aforementioned contact details serve as valid communication addresses under the contract.
Third, if signing a framework agreement is not feasible, it is advisable to utilize email addresses or WeChat accounts that bear the counterparty's company domain name as the suffix or are displayed on their business cards. This precautionary measure helps avoid situations where the other party disputes the legitimacy of the contact person being an employee of the company.
Fourth, it is recommended to retain original copies of relevant delivery notes, transport documents, and receipts as supporting evidence alongside the electronic data messages. This practice strengthens the evidentiary chain in case of disputes.
Fifth, in long-term cooperation arrangements involving rolling settlements or similar structures, it is essential to regularly reconcile accounts and diligently preserve original account statements.
Lastly, it is preferable to store emails on independent third-party network servers, preferably through web-based email services. This mitigates risks associated with using local computer software or company-owned servers for sending and receiving emails. If the use of such methods is necessary, ensure that appropriate backups are maintained on web-based or independent third-party network servers.
In conclusion, while contracts transmitted through email, WeChat, WhatsApp, and similar means possess legal validity, challenges persist concerning their evidentiary value and authenticity. By implementing additional measures such as promptly confirming contracts in writing, signing framework agreements, preserving relevant documents, and utilizing independent third-party network servers, we can alleviate these challenges.
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