Analysis

Civil Code 2.0 

Legal alert (2/2014)

The Polish government is currently debating amendments to the civil law in respect of formats of legal transactions. The said changes are aimed to align the general civil law regulations to the possibilities allowed by electronic transferring of information which – even though commonly applied – still seems new and unfamiliar to legislators.

The Polish government is currently debating amendments to the civil law in respect of formats of legal transactions. The said changes are aimed to align the general civil law regulations to the possibilities allowed by electronic transferring of information which – even though commonly applied – still seems new and unfamiliar to legislators.

Declarations of knowledge and declarations of sentiments treated like declarations of intent

The first of the amendments suggested by legislators does not concern electronic data transfers. Legislators have proposed a provision according to which the rules that apply to declarations of intent should be used in respect of other declarations too. This primarily concerns declarations of knowledge and declarations of sentiments which embrace, among others, all suretyships and guarantees made by partners or a company as part of share acquisition transactions, declarations made by economic operators under public contracts as well as other declarations that do not necessarily have legal power.

For the time being, it is rather difficult to assess the implications of this amendment.

It seems that the above should confirm for instance that companies must submit declarations of knowledge in accordance with the rules of representation arising from the law and the company’s Articles of Association.

However, the proper application of the regulations on defects in declarations of intent to declarations of knowledge may prove far more complicated. It is also hard to assess whether this amendment will make it possible to demand that a specific declaration of knowledge or a declaration of sentiments be made in court, as is now viable in respect of declarations of intent under Article 64 of the Civil Code. The practical application of Article 173 of the Code of Commercial Companies stipulating that: where all shares in the company are vested in the sole shareholder or in the sole shareholder and the company, any declaration of intent made by the shareholder to the company must be in the written form on pain of invalidity may also be debated.

Let us hope that Polish courts will not be deluged with suits related to ‘I love you’ statements, and the management boards of single-person companies will not require from the partners to write down - on pain of nullity - everything they want to share with the company. Still, although apparently trivial, the amendment may cause some confusion.

New forms of legal transactions – document and electronic formats

All other amendments concern the forms of legal transactions.

The draft introduces a new form of legal transactions – the format of a document. In order to meet the criteria of the document format it is enough to make a declaration of intent in the form of a document and to employ a method that makes it possible to determine the individual making that declaration. A document is defined as an information carrier with the capacity to retrieve the information content. 

Hence the document format will not require a signature, as it will be sufficient to be able to establish the identity of the person making the declaration. Consequently, without going into a detailed analysis of how to understand the requirement that an information carrier must exist, it seems that the format of a document is maintained in the exchange of electronic or text messages or even when a comment is left on a social network service.

As a result, it will be feasible to stipulate that the format of a document is maintained (e.g. e-mail or text message exchange) for the validity of the legal transaction between parties. The first statutory use of the document format is that it will serve as proof when concluding a loan agreement valued over PLN 1 thousand.

Even now enterprises often enter into contracts through e-mails or through other electronic data exchange systems. The changes suggested in the bill will formalize such practices. Additionally, considering that in order to maintain the document format it is required to be able to determine the person making the declaration, they may contribute to more precise contractual regulation of the risks associated with improper use of e-mail addresses or phone numbers.

According to the amendments the electronic format constitutes a separate form of legal transactions. In order to meet the criteria of the electronic format it is enough to make a declaration of intent in the electronic form and accompany it with an electronic signature that makes it possible to identify the individual making that declaration and to detect any later attempts to alter the declaration content.

In principle, the declaration of intent made electronically will be equivalent to the declaration of intent in writing, which implies that whenever the regulations of the law require the written form, one will be able to use the electronic form instead, unless detailed regulations exclude that possibility.

The draft bill has been tabled for governmental discussions, and it has not been examined by the Seym yet. The Act will come into force 6 months after its publication.

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