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Electronic Signatures - The Law of the Land
By Peter Kelman, Esq.
This article appeared in substantially the same form in the Mass HighTech, February 5, 2001.
As of October 1st of 2000, typing your name at the bottom of an e-mail may be enough to create an enforceable contract. Such is the result of the legislation passed by Congress this summer that recently took effect. The Electronic Signatures in Global and National Commerce Act, or E-SIGN (certainly one of the better acronyms for federal legislation) was enacted to facilitate electronic commerce. E-SIGN is a federal statute (Public Law 106-229) that affects transactions involving interstate commerce conducted electronically.
respect to any transaction in or affecting interstate or foreign commerce:
into everyday English:
Presumption is a long way from certainty. E-SIGN provides a base case for an answer, but like life, that answer may change as more facts are discovered.
If you do business over the Internet and rely on a "click-wrap" or "click-through" form of agreement with your customers, you may want to alter the agreement in light of E-SIGN. The validity of such agreements has always been uncertain. In some circumstances courts have found these agreements to be binding, in other circumstances, not binding. An issue that troubles courts is whether a user's clicking on a pop-up window really constitutes assent. With E-SGIN, a more prudent approach to obtain consent may be to ask a user to sign a statement that they have read and agree to such terms and conditions, and have that statement delivered to the company as an e-mail.
In an effort to promote electronic commerce, Congress included an intriguing section on "electronic agents," more commonly called "bots." Section 101(h) states that a contract entered into by an electronic agent is binding on the principal. So if you shop by bot, make sure your bot is well-behaved and knows its limits.
Regulation and validation of electronic documents and signatures does not end with E-SIGN. To date, twenty-two states have adopted similar laws based on a model statute called the Uniform Electronic Transactions Act, or UETA (definitely not as catchy as E-SIGN) for short. UETA plugs some holes intentionally placed in E-SIGN. According to Senator Andrea F. Nuciforo, Jr. (D-Pittsfield), who serves as chairman of the joint Committee on Banks and Banking, an electronic signature bill will be introduced in the Massachusetts legislature this year. Senator Nuciforo supports the measure and comments, "I expect that the Massachusetts bill will look very much like the uniform act that has been considered by other states throughout the country. A Massachusetts UETA will provide our state courts with jurisdiction, and will validate E-signatures for Massachusetts transactions that do not affect interstate commerce."
It is often said that one of the virtues of the Internet is that no one knows if you are a dog. Now, however, if you bark, your woof is your word.
Copyright Peter Kelman, 2001. All rights reserved.