Banking activities vs. Coronavirus
Basic information about forms of legal transactions
Form of contract
In accordance with Article 76 of the Civil Code, where the parties have stipulated in a contract that a specific transaction is to be made in a specific form, the transaction will only be effective if that form is observed.
However, if the parties have agreed on written, document or electronic forms without specifying the consequences of failure to observe the given form, such stipulation is deemed to have been made only for evidentiary purposes.
Form of amendment, addition, termination and withdrawal
Article 77 of the Civil Code provides that any additions or amendments to an agreement must be made in the same form as has been agreed for the conclusion of the agreement.
If the agreement has been made in written, document or electronic forms, its termination by mutual consent, withdrawal or termination by notice shall be made in document form, unless another form has been agreed upon.
If the agreement has been concluded in another specific form (for example, a pledge agreement – a form with a certified date), its termination by mutual consent must be in the form prescribed for its conclusion, and withdrawal or termination by notice must be made in writing.
Article 772 of the Civil Code defines the document form of legal transactions. This form only requires making a declaration of intent in the form of a document in a manner allowing for the identification of the person making the declaration.
The document form is intended to be less formalised than the written form, as it does not require a signature by hand. The document form will be observed only if the person making the declaration of intent records the content of such declaration in the form of a document himself or agrees to have it recorded in the form of a document by another person.
The document form is reserved for loan agreements above PLN 1,000 (Article 720(2) of the Civil Code).
How to replace the required written form for the transaction to remain valid?
Article 781(2) of the Civil Code provides that the electronic form is equivalent to the written form – in this respect the doctrine emphasises the principle of two-way interchangeability between the two forms.
What is an electronic form?
- in order to observe the electronic form of a legal transaction, it is necessary to make a declaration of intent in electronic form with a qualified electronic signature (Fras Mariusz (ed.), Habdas Magdalena (ed.), Kodeks cywilny. Komentarz. Tom I. Część ogólna (art. 1-125)). Please note that the free Trusted Profile available on the ePUAP platform is used only for contacts with administration bodies;
- a qualified electronic signature issued either by a Polish qualified trust service provider or a provider based any other EU Member State, can be used for the purposes of electronic form. A qualified electronic signature based on a qualified certificate issued in an EU Member State is recognised as a qualified electronic signature in all other Member States. ((Fras Mariusz (ed.), Habdas Magdalena (ed.), Kodeks cywilny. Komentarz. Tom I. Część ogólna (art. 1-125)).
If an agreement does not explicitly exclude the use of electronic form, such form is interchangeable with the written form.
Form of banking activities
Article 7 of the Banking Law provides that declarations of intent related to the performance of banking activities may be made in electronic form.
Pursuant to Article 7 of the Banking Law, documents related to banking activities may be made on computerised data carriers provided that such documents are duly created, recorded, transmitted, stored and secured.
According to a commentary by Zbigniew Ofiarski – Article 7(1) of the Banking Law does not contain any additional stipulations, therefore declarations of intent may be made in any electronic form and not only in the form of declarations of intent bearing a secure electronic signature verified with a valid qualified certificate. The solution provided for in the act, based on which “ordinary” electronic signatures (without a qualified certificate – used e.g. in e-mail communication) have the legal effect of observing the requirement of written form, is significant for banks and their customers in view of the costs of certification services and the exclusion of the possibility for banks to issue qualified certificates for their customers. (Article 6(1)(6)a) of the Banking Law).
Article 7(1) of the Banking Law further provides that only declarations of intent relating to banking activities may be made in electronic form. The cited provision uses the general term “banking activities”, so it is permissible to make such declarations relating to banking activities both in the strict and broad sense.
As recommended by the Polish Bank Association for selected interpretation problems with the Consumer Credit Act, both consumer credit and banking activities (pursuant to Article 7 of the Banking Law) may be made by means of distance communication.
Other forms of contracting – the example of the Consumer Credit Act
Article 29 of the Consumer Credit Act provides that a consumer credit contract should be concluded in writing (according to Czech Tomasz, Kredyt konsumencki. Komentarz, wyd. II – the form specified in Article 78 § 2 of the Civil Code, i.e. electronic form, may be used as equivalent).
However, in his commentary to the Consumer Credit Act, Tomasz Czech states that it should be recognised that a consumer credit contract can be concluded in writing, in electronic form and on a durable medium (as confirmed by the pro-EU interpretation of Consumer Credit Directive 2009/48/EC; teleological interpretation – written form is not necessary for ensuring the protection of consumers’ interests; and the fact that the opposite interpretation would lead to discrimination against non-bank lenders – pursuant to Article 7 of the Banking Law – banks may draw up a consumer loan contract on an electronic storage medium) – this solution is generally accepted in the case law of Polish courts.
Importantly, the situation described in para. 6(b) above applies both to consumer credit contracts concluded in the presence of both parties and at a distance – Article 29(1) of the Consumer Credit Act applies to both of these situations (Czech Tomasz, Kredyt konsumencki. Komentarz, wyd. II).
In view of the above, it is not necessary for the parties to append their handwritten or electronic signatures on a contract – a durable medium means, inter alia, unsigned paper.
Examples of observing the required form when concluding a consumer loan contract:
- appending a handwritten signature by both parties on a hard-copy document (first sentence of Article 78 § 1 of the Civil Code);
- appending a handwritten signature by a borrower on one copy of a hard-copy document, and by a lender on the other copy of that document, and then exchanging both copies between the parties (second sentence of Article 78 § 1 of the Civil Code);
- making declarations of intent by the parties by means of distance communication (e.g. telephone, e-mail), and then writing contractual provisions in the form of a hard-copy document (e.g. a computer printout), without handwritten signatures appended;
- making declarations of intent by the parties in electronic form, and fixing them as electronic documents on a durable medium
What if the contract has already been concluded? No technological solutions – proposed solutions
If written form is required under pain of nullity, the safest solution – in the time of the epidemic – for both parties would be to use
a qualified electronic signature.
- Article 781 § 2 of the Civil Code provides that electronic form is equivalent to written form – in this respect, the doctrine emphasizes the principle of interchangeability of both forms.
- If a contract does not explicitly exclude the use of electronic form, it may be used instead of written form.
- Article 7 of the Banking Law provides that declarations of intent related to banking activities may be made in electronic form.
Post or courier services
Post/courier services are another, unfortunately more time-consuming, solution – in accordance with Article 78 of the Civil Code, for the usual written form to be observed, it is sufficient to exchange documents containing declarations of intent, i.e. to exchange copies of contracts signed by each party.
Another common practice is to confirm customer data, including by phone (in accordance with Article 7 of the Banking Law, electronic form is sufficient for banking activities).
Should a bank archive electronic documents? If so, will electronic archiving be sufficient or should the documents be printed and archived after the pandemic?
According to Zbigniew Ofiarski’s commentary on Article 7 of the Banking Law:
1.Article 7 of the Banking Law allows for drawing up documents related to banking activities on IT storage media, provided they are duly created, fixed, transferred, stored and secured.
2. Only fixed documents may be stored. The date of fixing should be specified, and if the durability of the medium on which a document is stored is shorter than the required period of storage of that document, then fixed documents should be transferred to another electronic storage medium.
3. After the required period of storage, the document shall be removed from the electronic storage medium irreversibly. If the required period of storage for all documents fixed on an electronic storage medium elapses, that medium shall be modified to prevent their reproduction.
4. It is a standard that documents are stored in at least two copies (each on a separate or different electronic storage medium). The media with both copies should be stored so as to ensure the security of the documents.
5. Each copy shall be identical to the original document. Documents may be copied to another electronic storage medium only under the supervision of persons authorised in accordance with relevant internal procedures, observing the principles of trading security and protecting the interests of banks and their clients. Each electronic storage medium used for storing documents should be marked to allow for its identification (ID).
6. A document is considered secured if the following cumulative conditions are met on a continuing basis:
- it can be accessed only by authorised persons;
- it is protected against accidental or unauthorised destruction;
- it is subject to document protection methods and measures being generally recognised as effective when applied.
7. In accordance with Article 7(2) of the Banking Law, services related to the safekeeping of electronic documents may be performed by banks, companies of banks and other entities, as well as ancillary banking services undertakings.
8. Each entity providing services related to the safekeeping of electronic documents (a bank, a company of a bank and other entities, an ancillary banking services undertaking) is obliged to comply with the rules for the scope of banking secrecy protection, set out in particular in Articles 104 and 105 of the Banking Law.
To sum up – there is no document storage method imposed. Banks may, if possible, store documents in electronic form, while not overlooking the need to ensure access to these, including in case of control. There is no need to print documents after the quarantine period. What is more, this is a good opportunity to consider the digitization of archives and the use of services offered by cloud providers in this respect.
Agnieszka Serzysko PhD
Attorney at Law, Partner, Head of Financial Services
M: +48 608 317 176