Clinton Signs Electronic Signatures Bill

(July 3, 2000) Bill Clinton signed S 761, an act to provide for the acceptance of electronic signatures and electronic contracts in interstate commerce. The signing culminates a long and contentious legislative battle that began in early 1999.

President Clinton spoke at the signing of the bill on Friday, June 30. He stated that the "Electronic Signatures in Global and National Commerce Act will open up new frontiers of economic opportunity while protecting the rights of American consumers. The new law will give fresh momentum to what is already the longest economic expansion in our history, an expansion driven largely by the phenomenal growth in information technologies -- particularly the Internet."

"Firms across America are moving their supply and sales channels on-line, improving customer service and reducing costs. The resulting productivity gains are rippling throughout our economy, helping wages to rise, businesses to start, jobs to be created without causing inflation. And individuals are not just buying and selling on-line, they're gaining information that is empowering them as consumers and as citizens."

Rep. Tom Bliley (R-VA), who led the House effort to pass an electronic signatures bill, stated that, "This is a landmark achievement for electronic commerce."

Several other members of the House were active it getting a bill through the House, including Billy Tauzin (R-LA), Anna Eshoo (D-CA), Jay Inslee (D-WA), and many others.

	Rep. Tom Bliley (R-VA)

Rep. Bliley added, "It will open-up the flood gates to many new transactions that consumers and businesses will be able to do on-line. It will give consumers greater confidence and convenience when shopping online. Whether you are opening up an IRA account or applying for a mortgage, you would be able to do the entire transaction online. And the transactions will carry the same legal weight as if you had signed-up in person."

Sen. Spencer Abraham (R-MI) sponsored the Senate electronic signatures bill.

After a long legislative process in 1999, both the House and Senate passed electronic signatures bills at the end of the year. However, the two versions were different, and had to be reconciled. After many delays, and marathon negotiation sessions, the conference committee issued its conference report on June 8, 2000. The House passed it overwhelming on June 14, and the Senate did the same on June 16.

The act, as signed by the President, is long and complex. It provides for the validity of electronic signatures and contracts. But, it also contains numerous exceptions, restrictions, and qualifying provisions.

The act provides that electronic signatures and electronic contracts used in interstate commerce shall not be denied validity because they are in electronic form. The key clause of the act, at Title I, Section 101(a), provides:

"Notwithstanding any statute, regulation, or other rule of law (other than this title and title II), with respect to any transaction in or affecting interstate or foreign commerce (1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and (2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation."

The act then goes on to place numerous limitations on the use of electronic signatures and contracts, and on the scope of federal preemption of state law.

First, the act provides (at Title I Section 101(b)) that it does not alter or limit any other statute, regulation, or rule of law, other than those that require the contracts or signature be in nonelectronic form. Second, the act provides that it does not require any person to use electronic contracts or signatures.

The act goes on to provide limitations on the use electronic contracts in transactions involving consumers. If a statute, regulation or rule of law requires information to be provided in writing, the use of an electronic record will suffice only if the consumer has affirmatively consented, the consumer is provided with prior notice regarding his rights to receive a written record and to withdraw consent, and the consumer has the software and hardware necessary to read and save the electronic record. (See, Title II, Section 101(c).)

The act also enumerates several exemptions (at Title I, Section 103). These exemptions include any statute, regulation, or rule of law regarding:

• wills, codicils, and testamentary trusts.
• adoption, divorce, and family law.
• court orders or notices, and official court documents, including briefs.
• notice of cancellation of utility service.
• any notice regarding an individual's rental of his primary residence.
• notice of cancellation of health or life insurance.
• notice of recall.
• documents required to accompany the transportation of hazardous materials.

The act preempts state law, to an extend. The act provides (at Title I, Section 102) that "A State statute, regulation, or other rule of law may modify, limit, or supersede the provisions of section 101 with respect to State law only if such statute, regulation, or rule of law (1) constitutes an enactment or adoption of the Uniform Electronic Transactions Act as approved and recommended for enactment in all the States by the National Conference of Commissioners on Uniform State Laws in 1999 ..." or it specifies alternative procedures for establishing the validity of electronic signatures and contracts that are consistent with this act.

Title II of the act deals with transferable records that are in electronic format.

The act takes effect on October 1, 2000. However, several provisions of the act take effect at a later dates.

The act also imposes several responsibilities upon the Department of Commerce. Title III of the act requires that the "Secretary of Commerce shall promote the acceptance and use, on an international basis". Title I also requires two studies for Congress to be conducted by the Department of Commerce within 12 months. First, it is to compare the U.S. Postal Service to electronic mail. The second, to be conducted jointed with the Federal Trade Commission, is to study electronic signatures and contracts generally. Also, the Commerce Department is to conduct an evaluation of the enumerated exemptions to the act within 3 years.

Title IV of the act includes a provision unrelated to electronic signatures. It amends the Child Online Protection Act by allowing the Child Online Protection Commission to accept gifts for the purpose of funding or facilitating the work of the Commission. The Child Online Protection Act, was enacted in 1998 provided for a Commission to study ways to protect children from online pornography and other materials. The Act did not, however, provide any funding for the Commission. The Commission sought either Congressional funding, or permission to accept funding from private sources.