E-Signatures in Global National Commerce

We live in a modern legal world which will never revert to old technologies.  In order to progress as a society, we cannot afford to rely upon old technology.

In October 2000, the U.S. adopted new electronic commerce laws through the "Electronic Signatures in Global and National Commerce Act" ("E-Signature").  Essentially, this law deals with business dealings and the internet.  It is intended to facilitate the use of electronic contracts in the internet world.

E-Signature provides that a contract cannot be denied solely because it is in electronic form.  At the same time, an electronic signature may be an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or accepted by a person with the intent to sign the record.

The purpose of E-Signature is to allow buyer and seller to contract via electronic means.  The concurrent trading of documents between buyer and seller is much more efficient than traditional mail or even facsimile.

When you input a PIN at an ATM or purchase merchandise through the internet, you are using your electronic signature.  When you input your unique identification, you are stating your identity.  You name stated in an email constitutes an electronic signature under E-Signature.

E-Signature will broaden the effectiveness of  internet commerce, will reduce transaction expenses and dramatically speed up transactions.

E-Signature is not applicable to all agreements.  It applies to transactions in interstate or foreign commerce.  These cover business, consumer or commercial matters only.  E-Signature does not apply to wills, family law matters, court orders and legal notices.

Uniform Electronic Transactions Act
Technology plays a basic role in the world of contracts.  The Uniform Electronic Transactions Act ("UETA") was passed in 1999.  The UETA welcomes electronic transactions and records as functional equivalents of paper contracts.  UETA was designed to integrate with digital signature legislation and provide a basis for confirming and implementing electronic records and signatures in electronic commerce.

E-Signature was carefully drafted to amalgamate with UETA.  E-Signature acknowledges the UETA and states that individual states may modify or supersede E-Signature, provided those laws do not clearly violate the federal law.

E-Signature and UETA will facilitate electronic commerce by increasing the usage of electronic contracts.  These laws offer a consistent basis for recognizing electronic contracts without modifying existing contract law.

E-Signature establishes procedures for the use of electronic contracts. An electronic agreement qualifies as a contract under the Statute of Frauds.  However, in a click-wrap agreement, the user clicks his or her agreement to confirm acceptance of a license or disclaimer before downloading software, entering an internet site or buying goods through e-commerce.     By confirming the agreement through an online click, this may confirm your intent to sign a contract.  However, there are significant remaining issues involving security and authentication.  Electronic contracts must ensure that  two willing parties are entering a binding agreement.  In particular, how do we ensure that the person entering the data really is the person intending to contract.  The seller must then rely upon an electronic document to ensure that it is entering a contract with the stated person. The electronic transaction must ensure that the data is 100% accurate.  It is essential that the terms transmitted are identical to the terms received by the seller.  If not, disputes may arise solely based upon the problems arising from electronic transmission.

Security Risks
In the electronic world, e-signatures, encryption, passwords and other identifying marks are used to confirm data and authenticity in a transaction.  PIN's or other electronic signatures are used to conduct electronic commerce.  There are real security risks in posting passwords and PIN’s through the internet. Digital signatures may be used as security measures.  Such digital signatures rely upon public key cryptography to confirm authenticity and protect data reliability. In order to increase security, in order to sign an electronic document using public key infrastructure, the sender needs to establish a public key-private key pair. The private key is kept private in order to create digital signatures.  The public key is connected to a person or subscriber.  This is established through a reliable third-party called a certificate authority ("CA").

The receiver must use software containing identical cryptographic keys used by the sender to decrypt the message by using the sender's public key.  The sender's public key must be used to decrypt a message encrypted with the sender's private key.  Confirmation is made only after the receiver successfully decrypts the sender's message.  The software then compares the electronic record send to the record received and then will identify that it has not been altered in transit.

Public Key Infrastructure digital signatures offer solutions to authenticity and integrity.  However, E-Signature leave other options to the parties.  When the transaction has been confirmed, the electronic record needs to be saved in order to accurately reflect the contract.  The record must be available to buyer and seller.  Technology and e-commerce will certainly evolve over the coming years.  The law is flexible enough to permit adaptation in our technological age.

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