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On October 1, 2000, the E-Signatures Act will begin to take effect. 1 It is intended to promote our growing Internet-based economy by eliminating uncertainty as to whether on-line contracts are legally enforceable. Under its provisions, no contract can be denied legal effect merely because it was formed using an electronic document or signature. Likewise, with only a few enumerated exemptions, any legal requirement to retain or provide a paper document can be satisfied instead by an electronic document that contains the same information. The E-Signatures Act even directs the U.S. Secretary of Commerce to "promote the acceptance and use ... of electronic signatures." 2 Under this directive the U.S. Patent and Trademark Office will begin accepting electronic patent applications through the Internet this fall. As the U.S. Secretary of Commerce, William M. Daley, recently explained: "What eBay has done for auctions, we are trying to do for government." 3 Somewhat ironically, the E-Signatures Act expressly exempts courts from any obligation to accept electronic briefs or other electronic filings. 4 As electronic commerce continues to become a more significant part of our economy, they are certain to entertain disputes over electronic records, contracts or signatures. At the very least, the legal and technical issues involved with authenticating electronic files will soon find their way into paper briefs and courtroom demonstrations. In fact, the advent of another new communications technology raised similar issues well over one-hundred years ago. In one of the earliest cases that tested the validity of a contract formed through Morse Code, the New Hampshire Supreme Court explained in colorful language: It makes no difference whether [the telegraph] operator writes the offer or the acceptance in the presence of his principal and by his express direction, with a steel pen an inch long attached to an ordinary penholder, or whether his pen be a copper wire a thousand miles long. In either case the thought is communicated to the paper by the use of the finger resting upon the pen; nor does it make any difference that in one case common record ink is used, while in the other case a more subtle fluid, known as electricity, performs the same office.5 The E-Signatures Act dictates similar analysis for electronic records, contracts and signatures. As it explains in somewhat more mundane language: [A] contract, agreement, or record shall not be denied [legal effect] because of the type or method of electronic record or electronic signature selected by the parties. 6 By design this language is technology neutral so that contracting parties may select their own form of electronic records and signatures. These electronic records and signatures, in turn, should include safeguards commensurate with the importance of the underlying contract. In making this determination, some of the primary considerations include: (1) Authenticity - Does the electronic signature confirm that the person signing the record is who that person claims to be? (2) Integrity - Does the electronic signature and associated record prohibit subsequent alterations? and (3) Non-Repudiation, Does the electronic signature retain sufficient proof that both parties executed the associated contract?7 Where a legal obligation requires that a record be provided to a consumer in writing, the E-Signatures Act provides that the "requirement shall be satisfied by an electronic record if the consumer has affirmatively consented." 8 More detailed requirements for consent are set forth in the E-Signatures Act. As utilities, financial institutions and insurance companies begin to take advantage of these provisions, we can expect to begin receiving bills, statements and notices by email. According to some estimates these industries will save billions of dollars by eliminating the cost of mailing paper records and retaining warehouses of files. Bound by tradition and precedent, law firms and courts tend to embrace new technologies more cautiously. No doubt, the E-Signatures Act will lead the way.
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