Contract law in Switzerland
Verbal, written, electronic: there are many ways to conclude a contract. But when is a signature mandatory? And what other requirements are there for each form of contract? A brief overview of contract law in Switzerland, including FAQs.
Formal requirements or freedom of form?
A contract is an agreement between at least two people who want to commit to a specific obligation. Contracts only have mandatory formal requirements if the law says so. Otherwise, people are generally free to conclude contracts however they like – including, for example, verbally. However, this raises a number of problems. Firstly, there is no physical evidence of a verbal contract. This makes it difficult to prove a verbal agreement exists if there is a dispute. In addition, written contracts typically use more precise wording, making it easier to avoid misunderstandings. For this reason, the law stipulates formal requirements for certain types of legal transactions. There are four contract forms in Swiss contract law:
- Freedom of form
- Simple written form
- Qualified written form
- Notarisation (including legalisation)
The three "written" forms of contract in detail
Simple written form
This form of contract is intended to serve as evidence and protect the weaker contract party. There are two key or necessary elements: the content of the contract must be set down in writing and it must subsequently be signed by both contract parties.
Qualified written form
The requirements of the simple written form also apply to the qualified written form, but they are joined by additional ones. For example, it may be required for the content to be both written down and signed by hand. This is the case for wills. In other cases, some parts of the content (such as specific clauses) must be included in the written part.
Notarisation (including legalisation)
Notarisation is the strictest of these three formal requirements. Notarisation tends to be required for legal transactions involving very large sums, such as real estate, or for contracts concluded as a basis for entry in certain public registers.
Beyond notarisation, there is also legalisation, which mostly comes into play in an international context. Legalisation may be needed in some circumstances for a contract to be recognised in another country.
Implementation in daily life
Let’s consider a classic purchase contract. You pay a purchase price and receive an item of purchase in return. These are both performance obligations. Under Art. 184 et seqq. Swiss Code of Obligations, there are no formal requirements for this type of contract. If, for example, you want to buy some bread at a bakery – yes, that’s a purchase contract, too! – you don’t have to sign anything. The contract parties are still free to set down a purchase contract in writing in these cases if they so choose. For example, presumably you would never buy or sell a car without having a written document in your hands. The same is true of an employment contract. Under the Swiss Code of Obligations, an ordinary employment contract can be concluded without following any particular form – but this rarely happens in reality.
Frequently asked questions
Which contracts can be signed digitally?
Unless the law specifies otherwise, all contracts can be signed electronically. For example, Switzerland recognises the “holographic will” (Art. 505 Swiss Civil Code), which currently cannot be signed digitally. This type of will must not only be signed, but also written, by the testator’s own hand. In addition, it is currently not possible in Switzerland to electronically sign contracts that require notarisation. These include marriage and inheritance contracts. The same applies to documents requiring legalisation.
→ More information about the three signature standards and when they apply
Attention: You can use the examples linked above as a potential guide. If you are unsure, we recommend obtaining legal advice.
How should electronically signed documents be stored?
The authenticity of electronic signatures can only be verified electronically. This cannot be done on paper. For this reason, electronically signed documents must also be archived electronically. In Switzerland, correct storage and archiving of data is primarily governed by the Swiss Accounts Ordinance. The Ordinance specifies, for example, that information media must be complete, inalterable and able to be produced at any time. If the information medium is alterable, all incidents of access to it must be recorded.
Do "legally valid" and "valid as evidence" mean the same thing?
"Legally valid" and "valid as evidence" should not be confused. "Legally valid" means that something is valid from a legal perspective. "Valid as evidence" means that something can serve as evidence in court. For electronic signatures, this means the following:
- Legally valid: In Switzerland, provided that the requirements of Art. 14(2)bis Swiss Code of Obligations are met, a qualified electronic signature is equivalent to a handwritten signature and has the same legal effect. A simple electronic signature, on the other hand, can only be legally valid if there is no formal requirement for the document.
- Valid as evidence: The value as evidence of a simple electronic signature is generally very low. It can be difficult to prove who actually signed a document. This does not mean that a simple electronic signature can never serve as evidence. A qualified electronic signature, on the other hand, has much greater value as evidence, as the signatory can be determined with high certainty.
The situation for the simple and qualified electronic signatures is fairly logical. It is somewhat more complex for the advanced electronic signature. With respect to legal validity, the simple and advanced electronic signatures are the same. But the advanced electronic signature’s value as evidence is much higher. As in the case of the qualified electronic signature, it is possible to determine fairly definitively who the signatory is.
→ More information about the three signature standards
Is a contract valid without a signature?
Whether a contract can be concluded without a signature depends on the formal requirements. Contracts without a formal requirement are valid even if they are only verbal. As stated above, however, this can lead to problems if there is a dispute, as it is difficult to produce evidence of the contract’s content – or even that it exists.
When is a handwritten signature legally valid?
Signing by making a cross or another symbol is generally not legally valid. A legally valid signature must include the full surname. The signatory is free to decide whether to include their forename or at least first initial. Of course, the longer the signature, the more difficult it is to forge.