Enforceability of contracts executed by using electronic means in Mongolia

1) Is a contract legally enforceable if the parties exchange scanned copies of signed documents by email?

Yes. A contract may generally be legally enforceable where the parties exchange scanned copies of signed documents by email, provided that the parties' mutual intent to conclude the contract can be established, specifically stated in the contract, and the applicable legal requirements concerning the form and execution of the contract are satisfied under the Civil Code and other applicable law.

2) What requirements must be met for an electronic signature to be considered valid and legally binding?

Under the Law on Electronic Signatures, "an electronic signature" shall mean electronic data attached to or combined with the information in order to identify the person who signed the electronic information and/or used the electronic seal. It is valid and legally binding where it is used for electronic information that has been converted from paper form to electronic form through an information system, or that has been created, sent, received, stored, or otherwise made accessible in an electronic environment.

3) Can a contract be executed entirely electronically without a paper original?

Yes. A contract may be concluded entirely electronically without a paper original, provided that the applicable requirements for a valid electronic signature are satisfied, including through electronic signature platforms such as Adobe Acrobat Sign. 

Moreover, a contract concluded in electronic form becomes valid when the parties mutually express their intent, execute an electronic document, and affix a digital signature, or otherwise express their intent through technical means and software, mutually acknowledge such intent, and affix an electronic signature.

However, in the event of a dispute, the civil court will generally conduct a judicial examination or may also order an expert inspection report or require other evidence to verify its authenticity.

4) Are contracts and agreements concluded through online platforms or mobile applications legally enforceable?

Yes. Contracts and agreements concluded through online platforms or mobile applications may be legally enforceable under Mongolian law, provided that the applicable requirements for electronic transactions and the relevant type of contract are satisfied. In particular, the parties must appropriately express and mutually acknowledge their intent and execute the electronic transaction in accordance with the Civil Code and the Law on Electronic Signatures. However, where a particular contract is subject to mandatory registration, notarization, or other specific formalities, those requirements must also be satisfied.

However, in the event of a dispute, the civil court will generally conduct a judicial examination or may also order an expert inspection report or require other evidence to verify its authenticity.

5) How can a party prove in court that an electronic document was actually signed by a particular person and that its content has not been altered?

The party seeking to rely on an electronic document should be able to establish the identity of the signatory and the authenticity and integrity of the electronic document. 

Under Civil Procedure Law, the court may also order an expert examination/inspection report or require other evidence to verify its authenticity.

6) Can a contract be considered validly executed if one or both parties sign it using a facsimile signature?

No. The facsimile signature should be distinguished from a digital signature and an electronic signature under the Law on Electronic Signatures. The facsimile signature can be used only for internal operations of the Company, and the 
courts do not accept contracts executed using the facsimile signature; they recognize as valid only those signed with a handwritten signature or an electronic signature by both parties.

Where the law requires  contracts (such as immovable property related contracts) to be notarized or registered, or otherwise imposes specific execution formalities, those requirements must still be satisfied.

7) In what circumstances does the law require a specific form of signature or a paper original despite the possibility of executing the contract electronically?

The ordinary written contracts of a general nature (loans, sales and service agreements) may be executed electronically using a digital signature. However, the Civil Code and other relevant laws impose a specific requirement of notarial certification (in some cases, registration with the state registration) on certain categories of transactions — including the transfer of immovable property, agreements governing spousal property rights and testamentary instruments. These are predominantly carried out on paper, with the parties and the notary participating in person. 

8) What risks should businesses consider when using electronic methods to execute and sign contracts?

When entering into contracts and signing them electronically, businesses should ensure that the person signing the agreement has proper authority to represent the company, that the electronic signature used complies with applicable law, and that there is sufficient evidence to demonstrate that the contract has not been altered after signing. In addition, where the law specifically requires a transaction to be notarized or registered with a competent authority, the use of an electronic signature does not replace such requirements. 

9) Which types of contracts cannot safely be executed entirely electronically?

Certain contracts require specific notarial certification, and in some cases, registration with a state authority. This applies to certain categories of transactions, including but not limited to the transfer (pledge, sale and purchase or lease) of immovable property. These transactions shall be conducted on both paper and electronically, with all parties and the notary present in person and must be duly registered at the State Registration authority. 

10) Who bears the risk if an account or electronic signature is compromised and a third party signs the contract?

Under the Law on Electronic Signatures, the certificate holder is required not to transfer their private key to any other person and to ensure the confidentiality and security of the private key. If the private key has been disclosed to, or there is reason to believe that it has become known to, another person, the certificate holder is required to notify the certification authority immediately.

Accordingly, if a company fails to properly protect its electronic signature, private key or account information, and a third party uses such information to execute a contract, the company may bear the risks arising from its own negligence. However, where the electronic signature has been properly safeguarded, and a third party has used it without authorization, the company may have grounds to challenge the validity of the electronic signature and whether the contract was entered into with the company’s genuine intent. According to Article 33.2 of the Law on Electronic Signatures, any individual or legal entity that violates the provisions of this Law shall be subject to the liability prescribed under the Criminal Code or the Law on Violations, as applicable.

Authors: Bolormaa Volodya, Khulan Ganbold and Baigali Battulga.