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U.S. Electronic Signatures in Global and National Commerce Act
Mardi, 25 Septembre 2001, par Maureen Dorney

Subject : loi_etats_unis

Résumé :
On June 30, 2000, the President signed the Electronic Signatures in Global and National Commerce Act ( the "E-Sign Act"). The major provisions of the E-Sign Act become effective on October 1, 2000. Additional elements of the E-Sign Act relating to record keeping requirements imposed by governmental entities become effective on March 1, 2001. The E-Sign Act is intended to spur the growth of electronic commerce by insuring that electronic contracts, signatures and records will have the same legal status and effect as their ink and paper counterparts. Specifically, the E-Sign Act provides that a signature, contract, or other record relating to a transaction cannot be denied legal effect, validity or enforceability merely because it is in electronic form.

Corps de l'article :

U.S. Electronic Signatures in Global and National Commerce Act

by Maureen Dorney

Partner : Gray Cary law firm - Palo Alto. US

On June 30, 2000, the President signed the Electronic Signatures in Global and National Commerce Act (15 U.S.C.A. § 7001) ( the "E-Sign Act"). The major provisions of the E-Sign Act become effective on October 1, 2000. Additional elements of the E-Sign Act relating to record keeping requirements imposed by governmental entities become effective on March 1, 2001. The E-Sign Act is intended to spur the growth of electronic commerce by insuring that electronic contracts, signatures and records will have the same legal status and effect as their ink and paper counterparts. Specifically, the E-Sign Act provides that a signature, contract, or other record relating to a transaction cannot be denied legal effect, validity or enforceability merely because it is in electronic form.

Definitions of Electronic Signature
The E-Sign Act contains the following definition for an electronic signature: "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record." Further, an electronic record is "a contract or other record created, generated, sent, communicated, received, or stored by electronic means."

The E-Sign Act is intended to be technology neutral. A variety of technologies can function as an electronic signature, including, passwords, smart cards, digital certificates and biometrics (such as fingerprint recognition and retinal scan technology).

General Scope
The E-Sign Act applies to transactions in both interstate and foreign commerce. The E-Sign Act prohibits denying the validity, enforceability or legal effect of an electronic signature, agreement or record solely on account of the fact that such signature, agreement or record is in electronic form or is affirmed in electronic form. The E-Sign Act further recognizes the ability to use electronic agents to form binding contracts, so long as the action of the electronic agent is attributable to the person to be bound.

The E-Sign Act is intended to clarify the legal status of electronic signatures and records in the context of existing legal requirements with respect to writings and signatures. This does not limit, however, the ability to assert that an electronic signature is (i) a forgery, (ii) used without authority, or (iii) invalid for reasons that would invalidate the effect of a traditional written signature (e.g., lack of capacity). Likewise, the E-Sign Act will not affect the content or timing of any disclosure required to be provided to the consumer under any relevant law or regulation.

The E-Sign Act provides that any signatures or records that must be notarized or made under oath may be notarized electronically, provided that all the other legal requirements of the relevant statute are satisfied.

With respect to the retention of electronic records, if a statute, or other rule of law, requires that a contract or record be retained for some period of time, that requirement may be met by retaining that record in electronic form so long as (i) the electronic record accurately reflects the information set forth in the contract or other document, and (ii) the electronic record remains accessible to all persons who are entitled by law to access it. Similarly, an electronic record relating to a transaction shall satisfy any legal requirement to retain or provide a document in its original form.

Subject to compliance with the consumer protection provisions discussed below, any legal requirement to retain a copy of a check for a period of time will be satisfied by an electronic record of the information on the front and back of the check.

As expressly noted in the statute, the E-Sign Act applies to, among other things, the business of insurance, guaranteed loans, insured loans, and student loans. However, the effective date of the E-Sign Act with respect to the use of certain electronic records regarding student loans or other loans insured by the United States Government is June 30, 2001.

Exceptions

The E-Sign Act expressly excludes certain legal and commercial instruments to the extent that they are governed by:

1. a statute or other rule of law governing the creation or execution of wills, codicils or testamentary trusts;
2. a statute or other rule governing adoption, divorce or other matters of family law;
3. the Uniform Commercial Code, other than Sections 1-107, 1-206 and Articles 2 and 2A;
4. court orders or notices or official court documents (such as briefs and pleadings);
5. notices pertaining to the cancellation of utility services or health or life insurance; and notices concerning the default, repossession, foreclosure, eviction of a primary residence;
6. contracts, agreements or records involving a state agency, if the agency is not acting as a party to a commercial transaction in interstate commerce;
7. notices pertaining to the recall of a product or material failure of a product, that risks endangering health or safety; and
8. any document required to accompany any transportation or handling of hazardous materials, pesticides, or other toxic or dangerous materials.

The E-Sign Act also directs the Securities and Exchange Commission to enact a regulation which exempts from the scope of the E-Sign Act any records that are required to be provided in order to allow advertising, sales literature, or other information regarding a security issued by a registered investment company.

Special Treatment for Consumer Records

To satisfy concerns that consumers might be unfairly disadvantaged by the use of electronic signatures and records, the E-Sign Act sets forth special rules that must be followed when the provider of a record ("Provider") must provide or make written records available to a consumer. Electronic records which take the place of records that are required to be provided to a consumer in writing must be capable of review, retention, and printing by the consumer as long as the consumer is using the hardware and software specified by the Provider.

The E-Sign Act provides that the consumer must affirmatively consent to the use of electronic records, and the consumer must not have withdrawn his or her consent to the use of electronic records. To satisfy the consent requirement, the consumer must consent electronically, or confirm consent electronically, in a manner that reasonably demonstrates that he or she can access the records in the electronic format used by the Provider.

Businesses must make sure to follow a detailed opt-in procedure before beginning to provide and store consumer records in electronic form. This procedure must include disclosing the following information to the consumer in a clear and conspicuous manner:

1. a statement regarding the consumer’s right to have the record made available on paper or in non-electronic form;
2. a statement regarding the consumer’s right to withdraw consent to the use of electronic records and any conditions or consequences that would thereby occur as a result of such withdrawal;
3. a statement informing the consumer as to whether the consent applies (a) only to the particular transaction in which the obligation to provide records arose, or (b) to identified categories of records that may be provided in the course of the parties’ relationship;
4. a description of the procedures in which the consumer must follow in order to (a) withdraw consent or (b) update the information needed to contact the consumer electronically;
5. a statement informing the consumer that, upon request, the consumer may obtain a paper copy of the electronic records and the fee associated with obtaining such copy; and
6. a statement describing the hardware and software specifications associated with accessing and retaining the electronic records.

If the Provider changes the hardware or software requirements for communicating electronically with the Provider and this change creates a risk that consumers can no longer access the Provider’s records electronically, then the Provider must do the following:

1. provide the consumer with a statement detailing the changes to the hardware or software requirements;
2. provide the consumer with a chance to withdraw consent to the use of electronic records without the imposition of any fees for such withdrawal and without the imposition of any conditions not previously detailed; and
3. get consent, or confirmation of consent, from the consumer, either electronically, or in a manner which reasonably demonstrates that the consumer can access information in the modified electronic form.

A Provider’s failure to adhere to these procedures shall be treated as a withdrawal of consent upon election by the consumer.

The E-Sign Act expressly states that the legal effectiveness, validity or enforceability of any contract executed by the consumer shall not be denied legal effect solely because of the failure to obtain electronic consent or confirmation of consent. Furthermore, if the consumer withdraws his or her consent, the legal effectiveness, validity and enforceability of those electronic signatures or records provided or created prior to the withdrawal shall remain unchanged. In addition, the withdrawal of consent can take effect within a reasonable period of time after receipt by the Provider of the consumer’s withdrawal of consent.

Governmental Exceptions

A federal or state agency may waive some of the requirements regarding the electronic retention of records under particular circumstances. For example, a federal or state regulatory agency may require retention of a record in tangible printed or paper form if: (1) there is a compelling governmental interest relating to law enforcement or national security for imposing such requirement; and (2) imposing such requirement is essential to attaining such interest. Also, an agency may exempt records from the consent requirements of the E-Sign Act if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to the consumers.

The E-Sign Act sets forth the following limited circumstances where a State law, may modify, limit or supersede the provisions of the E-Sign Act regarding the validity of electronic signatures and records:

1. the law must constitute an enactment or adoption of the Uniform Electronic Transactions Act as reported by the National Conference of Commissioners on Uniform State Laws; or
2. the law must specify alternative procedures or requirements for the use of electronic signatures to establish the legal effect of the contracts, agreements or records.

In addition, if a State law is adopted after enactment of the E-Sign Act, the law must make specific reference to the E-Sign Act before any modifications or limitations on the provisions of the E-Sign Act will be enforceable.

Follow-Up

The Secretary of Commerce is generally responsible for promoting the purpose behind the E-Sign Act; namely, the national and international acceptance of the use of electronic signatures and records. The E-Sign Act requires the Secretary of Commerce to conduct periodic inquiries to report to Congress on the effects of foreign and domestic impediments to the E-Sign Act. The Secretary of Commerce must also conduct an inquiry within twelve months after the enactment of the E-Sign Act focusing on the effectiveness of the delivery of electronic records as compared to the delivery of written records via the United States Postal Service. Furthermore, by June 30, 2001, the Secretary of Commerce must submit a report to Congress detailing the benefits and burdens associated with electronic consent.

Conclusion

The E-Sign Act provides encouragement to businesses seeking to conduct transactions electronically because it holds the promise of reducing both transaction cost and transaction time. Companies should select and implement technology and procedures to allow for electronic signatures and transactions. These will vary depending on the value and sensitivity of the underlying transactions: generally, the greater the value and/or sensitivity of the transaction, the greater the need to employ highly secure procedures and technology (e.g. public key encryption based digital certificates as opposed to simple passwords). To avoid potential pitfalls created by the consumer oriented provisions of the E-Sign Act, companies should also ensure that they implement electronic signature and record keeping procedures in a manner that complies with the terms of the E-Sign Act.

For more information, please contact Maureen Dorney [(650) 833-2177 or e-mail mdorney@graycary.com

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