Electronic Signatures in Global and National Commerce Act (2000)

Electronic Signatures in Global and National Commerce Act (2000)

Steven Puro

Congress enacted the Electronic Signatures in Global and National Commerce Act (P.L. 106-229; also known as E-SIGN) on June 30, 2000, and the law became effective on October 1, 2000. The main purpose of this statute is to create an equivalent legal status for electronic signatures and documents with the legal status of handwritten documents. This act enhances possibilities of e-commerce especially in legal transactions and the financial services industry. The act's purpose is "to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically."

An electronic signature is information or data in electronic form connected to an electronic record. The person, or an electronic agent of the person, authorizes the signature as part of the intent to sign a contract, agreement, or record. Both consumers and businesses can now enter into contracts through electronic transactions. This law also allows transfer and use of electronic records and documents, and it grants legal status and legitimacy to these transactions, records, and documents. The electronic record-keeping provisions of this legislation became effective on March 1, 2001.

The key element of the act is presented in Title I:

(a) In General. Notwithstanding any statute, regulation, or other rule of law (other than this title and title II), with respect to any transaction in or affecting interstate or foreign commerce—

(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and

(2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.

An important part of national government responsibility through the Federal Trade Commission and the U.S. Department of Commerce is to prevent fraud and deception in the operation of the electronic transactions. Congress sought to protect consumers by requiring that they consent to receive electronic records. Prior to this law, many transactions—especially financial or credit matters—required consumers to receive such items as disclosures, statement of rights, obligations, or other notices in writing, and the law required the consumer to provide a written acceptance. This legislation allows this process to occur electronically.

A key question and an ongoing debate about this legislation centers on how to demonstrate consumer consent. The legislation addressed this concern and provides that the consumer must "consent(s) electronically or confirm(s) his or her consent electronically, in a manner that reasonably demonstrates that the consumer can access information that is the subject of the consent." For example, if a consumer has access only to Microsoft Word, the law would require businesses to format documents in that language. Another key issue is whether the federal legislation controls state consumer protection laws. In this legislation Congress protected state interests by allowing the federal law to be displaced by state action. States have the option of adopting either the Uniform Electronic Transactions Act (UETA) or another set of rules that effectively adhere to the electronic signatures legislation. The legislation takes into consideration that states could enact both the UETA and their own consumer protection provisions.

The societal importance of this legislation is that it legitimizes and expands the electronic marketplace. The law provides a basis for both consumers and business to ensure that electronic signatures and electronic records are valid legal documents with an assurance for the security of the signatures. The rapid extension of electronic resources combined with an accurate and acceptable form of electronic signatures allows for quick and effective operation of both global and national marketplaces. The Electronic Signatures in Global and National Commerce Act encompasses legal standards to create economic decisions in a technological era.

See also: Electronic Communications Privacy Act of 1986.

BIBLIOGRAPHY

Federal Trade Commission. "Federal Trade Commission and National Telecommunications Information Administration, Department of Commerce, ESIGN Public Workshop," April 13, 2001. <http://www.ftc.gov/bcp/workshop/esign>.

Menna, M. "From Jamestown to the Silicon Valley, Pioneering a Lawless Frontier: The Electronic Signatures In Global and National Commerce Act." Virginia Jornal of Law & Technology 12 (2001).

The Uniform Electronic Transactions Act

The Uniform Electronic Transactions Act (UETA) is a law proposed by the National Conference of Commissioners on Uniform State Laws. Adopted by twenty states by mid-2003, UETA, like the federal Electronic Signatures Act, was designed to remove barriers to electronic trade by providing a set of legal principles to govern electronic signatures and records. Some states adopted the uniform version proposed by the conference, while others incorporated additional consumer protections. States were not required to adopt legislation on this topic and could rely on the Electronic Signatures Act alone to govern their electronic transactions.