Contracting By "Electronic Signature
By adopting the e-Sign Act, Congress sought to create consistent legal standards to govern the enforceability of contracts created by parties using .electronic signatures.. The new law defines an .electronic signature. as an electronic sound, symbol, or process created by an individual and executed by that person with an intent to sign a record. For example, one who receives a contract offer via email may enter into the contract by emailing in reply that he or she accepts the offer stated in the original email below. However, a party to an electronic agreement must clearly express his consent to be bound by the terms of contract. Litigation may still arise if one party does not definitively express his intent to be bound or if the terms of the agreement are not stated clearly.
Parties Can Make Their Own Rules
The e-Sign Act allows, but does not mandate, users of electronic commerce to use or accept electronic signatures. It provides a great deal of autonomy to parties involved in e-Commerce, appeasing those accustomed to the freedom and speed of surfing the web. Now the parties to an electronic contract, agreement, or record have the ability to establish their own procedures and requirements when using or accepting electronic records and documents. Regardless of the methodology selected by users of electronic signatures, each document will retain the same legal effect, validity and enforceability of the traditional pen and ink signature.
Too Many Exceptions?
Although the e-Sign Act confirms the validity and enforceability of many e-commerce agreements and transactions, the Act expressly states that it will not apply to certain types of contracts and other legal documents. For example, the Act will not regulate the following legal transactions: (i) creation or execution of wills, codicils, or testamentary trusts; (ii) adoption, divorce, or other matters of domestic law; (iii) bank deposits and collections; and (iv) secured financing transactions. Additionally, this new legislation does not apply to a contract between a state agency and an individual unless the state is acting as a market participant or in some way affecting interstate commerce. Nor can the Act be relied upon for court orders or notices concerning the termination of utility services, foreclosure, eviction, or the cancellation of health or life insurance benefits.
State Law Supplements the e-Sign Act
Because the e-Sign Act does not govern many legally significant transactions, some critics of the Act claim that the law does not go far enough. However, the number of exceptions to the law likely reflects Congress. intention that the e-Sign Act be a short-term solution. Congress anticipates that the states will adopt laws, consistent with the e-Sign Act, that will be more comprehensive than the federal legislation. For instance, North Carolina recently enacted the Uniform Electronic Transactions Act (.UETA.), which will also become effective on October 1, 2000. As Congress expected, state lawmakers have adopted versions of UETA that more specifically address the manner and methods people and businesses will use to contract electronically.
E-Sign Act's Impact Unclear
Congress unquestionably enhanced the accessability of transaction business on the Internet and through other electronic mechanisms by passing the e-Sign Act. However, the new Act contains numerous exceptions and restrictions which may limit the law.s impact. Accordingly, on October 1, we will begin to see just how much Congress has raised the speed limit on the information superhighway.