Senate Commerce Committee Passes Electronic Signatures Bill

(June 24, 1999) The Senate Commerce Committee passed S 761, the Third Millennium Electronic Commerce Act, Wednesday morning, June 23, by a voice vote. The bill provides for the acceptance of electronic signatures in interstate commerce.

Related Pages

TLJ Summary of E-Signature Bills in the 106th Congress.
S 761, as approved by the Senate Commerce Committee, 6/23/99.

The Senate Commerce Committee adopted an amendment in the nature of a substitute by a voice vote. The bill seeks to promote electronic commerce by providing for the acceptance of electronic signatures and records in interstate commerce. The bill provides, among other things, that "A record or signature may not be denied legal effect or enforceability solely because it is in electronic form."

Sen. Spencer Abraham (R-MI), said that “Internet users are ready to go far beyond buying books and apparel on-line. The Internet is set to lead a revolution in the execution of business transactions involving thousands or millions of dollars in products and services -- transactions so important they require that both parties enter into legally binding contracts. This bill will ensure that individuals and organizations in different states are held to their agreements and obligations even if their respective states have different rules concerning electronically signed documents.”

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Sen. Abraham

“I congratulate Senator Abraham for his hard work on technology issues,” said Sen. John McCain (R-AZ), the Chairman of the Committee, and a cosponsor of S 761. “Information technology has opened up whole new avenues for learning, education, and it has also opened up whole new approaches to doing business. We must facilitate the incredible growth of electronic commerce  -- the engine of our economy -- with a set standard for accepting digital signatures.”

The version of the bill that was approved by the Committee differs slightly from the original version of the bill, S 761 IS, introduced on March 25, 1999.

How the Committee Amendment Differs from the Original Bill

  S 761 IS S 761 Committee Amendment
Title Millennium Digital Commerce Act Third Millennium Electronic Commerce Act
of Use of
"A contract relating to an interstate transaction shall not be denied legal effect solely because an electronic signature or electronic record was used in its formation." "(1) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.
(2) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.
(3) If a law requires a record to be in writing, or provides consequences if it is not, an electronic record satisfies the law.
(4) If a law requires a signature, or provides consequences in the absence of a signature, the law is satisfied with respect to an electronic record if the electronic record includes an electronic signature."
Preemption "Nothing in this section shall be construed to preempt the law of a State that enacts legislation governing electronic transactions that is consistent with subsections (a) and (b). A State that enacts, or has in effect, uniform electronic transactions legislation substantially as reported to State legislatures by the National Conference of Commissioners on Uniform State Law shall be deemed to have satisfied this criterion, provided such legislation as enacted is not inconsistent with subsections (a) and (b)." "This section does not apply in any State in which the Uniform Electronic Transactions Act is in effect."

Rep. Tom Bliley (R-VA), the Chairman of the House Commerce Committee, is sponsoring a similar bill in the House, HR 1714 IH, which is also known as the E-SIGN Act. Also, Rep. Anna Eshoo (D-CA) is the sponsor of a bill, HR 1320 IH, which is the House version of S 761 IS.

Related Story: House Telecom Subcommittee Holds Hearing on E-SIGN Act, 6/9/99.

The House Telecom Subcommittee held a hearing on HR 1714 on June 9, 1999. The House Finance Subcommittee is scheduled to hold a hearing on those provisions of HR 1714 which pertain to securities transactions on Thursday, June 24.

Rep. Bliley stated on June 23 at a Commerce Committee markup of an encryption bill markup that "I have recently sponsored legislation on ... electronic signatures that will be addressed in this Committee very soon."

One significant difference between HR 1714 and HR 1320 and S 761 is how they treat state laws regarding the use of electronic signatures in commerce. None of the three bills would preempt all state laws. However, the Bliley comes closer to complete preemption. The approach taken by Rep. Bliley in HR 1714 is to narrowly limit the permissible scope of any state statutes, and preempt any state laws passed more than two years after enactment of HR 1714.

Sen. McCain issued a press release after the hearing which stated that S 761 would "Preempt state law so that digital contracts aren’t denied legal effect solely because they are in electronic form. This Federal preemption of state law is an interim measure until the states enact uniform standards which are consistent with S.761 or the Uniform Electronic Transactions Act (UETA)."

There is widespread support, and little or no opposition, to an electronic signatures bill. The main area of contention is what role the states will have, if any, in crafting laws affecting electronic commerce transactions. Some electronic commerce companies favor preemption and a single national standard. Some states want to continue to play a role in this area.