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The Electronic Signatures in Global and National Commerce Act (E-SIGN), signed into law on June 30, 2000, was intended to put electronic media on a level playing field with traditional paper records in commercial transactions. Nearly two years later, E-SIGN (together with its counterpart in state law, the Uniform Electronic Transactions Act, which became law in Texas in 2001) seems to have accomplished this quite modest objective, but this still leaves unresolved most of the hard questions in electronic commerce law. Before E-SIGN passed, there was a surprising amount of uncertainty among businesses about what the legal consequences would be of changing from paper to electronic records. Perhaps even more surprising is the number of attorneys who felt just as perplexed. The net effect of all this uncertainty was to reduce investment in new electronic commerce technologies. Under U.S. law before E-SIGN and UETA, there were actually very few situations in which the absence of a signed piece of paper would make a contract unenforceable. Although the technology vendors knew that the switch from paper to electronic media rarely should affect the rights and obligations of the parties, their customers did not. However, the vendors were understandably reluctant to bundle legal opinions about the validity of contracts formed using their products together with the software and hardware. Enter E-SIGN, accompanied by UETA, which gave reluctant managers one less reason to defer upgrading their business information systems or to postpone adoption of new electronic commerce technologies. These laws provide that merely because a record or signature is in electronic form, it cannot for that reason alone be denied enforcement. These statutes were designed to create a transparent overlay of existing commercial law, changing as little substance as possible while cutting short pointless debates over form. The original design of E-SIGN was based on UETA, although by the time it was enacted, Congress had pretty well muddied the water. In a fairly inept concession to the idea of states’ rights, a provision was added to E-SIGN providing that state law will “supercede” federal law in any state that has enacted UETA without any nonuniform provisions. E-SIGN and UETA direct the attention of parties wishing to use electronic media to issues of record management. Unlike Statute of Frauds questions, making sure that adequate record management systems are in place to support electronic commerce is very serious indeed. E-SIGN provides that an electronic record can be denied legal effect unless it is a form that can be retained and accurately reproduced by all parties whose rights it governs. UETA contains a similar provision and goes on to provide that if the sender of an electronic record has inhibited the ability of the recipient to store or print it, then that record cannot be enforced against the recipient. BURDEN IS ON BUSINESS Even though UETA has been enacted in nearly 40 states and is pending before legislatures in most of the others, a quick, informal survey of commercial Web sites shows there is still a surprising lack of familiarity with this provision of UETA among Web merchants or their lawyers. Many Web site operators display essential terms and conditions in pop-up windows with no visible print or save functions, or hide them behind little windows with sliders that must be scrolled up and down to view the text. A court looking at these interfaces from an ordinary end user’s perspective could decide that the ability to print or store these documents had been inhibited. If a business deals with a consumer, E-SIGN imposes additional obligations whenever there’s a pre-existing requirement to provide the consumer with written disclosures. In these cases, the consumer must “affirmatively consent” to receive the disclosures in electronic form. For that consent to be binding, the business must provide a clear and conspicuous statement advising the consumer of the procedures related to the electronic record, including whether the consumer can ask for a paper version, which transactions will be covered by the consent and how the consent can be withdrawn. The party providing the electronic disclosure must confirm that the consumer consented to receive electronic disclosures “in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent.” E-SIGN places the burden of dealing with the uncertainties created by the current state of consumer electronic commerce technologies squarely on the business, not on the consumer. UETA, by contrast, simply provides that electronic media can only be used if the parties have consented, and does not create a special rule for determining when consent by consumer will be valid. Although E-SIGN’s consumer protection provisions clearly apply to any written consumer disclosure required by federal law, there is debate regarding whether the higher E-SIGN standard would apply to a state law disclosure requirement in light of the unusual “supercede” provision in E-SIGN. As a result, consumer advocates are lobbying state legislatures to pass new consumer protection laws transposing the E-SIGN consumer disclosure consent provisions into state law. Businesses thinking of adopting electronic media should not be seduced by the apparent low cost of Internet commerce. Rather, they should realize there is an inverse relationship between the time and expense of getting an electronic commerce system up and running, and the ease with which contracts formed using that system can later be used as evidence in the event of a dispute. The end user interaction with a commercial Web site that was quick and easy to set up and inexpensive to maintain may be nearly impossible to prove a year or two down the line when a dispute might end up in litigation. On the other hand, an electronic commerce system that was carefully constructed and well integrated into existing business information and record management systems will have a much higher up-front cost, but will produce a clear audit trail of records that can be offered later to prove the existence or terms of any individual contract. What issues remain unresolved after E-SIGN and UETA? The validity of clickwrap and browsewrap contracts is unlikely to be resolved any time soon. More ambitious statutes that try to reform the substance of contract law, such as the Uniform Computer Information Transaction Act, are mired in controversy and are unlikely to become law in Texas any time soon. Major issues in the business and technology of electronic commerce also remain unresolved, but most of them are beyond the power of legislatures to resolve them. The need for strong authentication systems to permit remote parties to be identified with confidence in online markets is a good example of a problem that is central to the development of electronic commerce, but that will have to be resolved by the marketplace. Legislatures around the world passing “digital signature” statutes do not appear to have persuaded anyone to use a technology that keeps failing to live up to the hype surrounding it. But getting sophisticated businesses to agree on what technology to use to authenticate other parties is a small challenge compared to getting county recorders throughout the Texas to accept electronic real estate records for filing. Jane K. Winn is a professor of law at Southern Methodist University Dedman School of Law. This semester, she is a visiting professor at the University of California at Berkeley.

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