Electronic Signatures and E-Sign

One of the most difficult issues to resolve in the area of consumer rights and the Internet is the role of “electronic signatures.” Traditionally, signatures have had a hallowed place in the arena of contract law, where they have been seen as crucial to making a valid contract between parties. But on a computer, it is impossible to sign a name; at least in the traditional way it has been done. Yet consumer transactions between parties require some sort of indication of agreement even over the Internet, some sort of indication there has been a “meeting of the minds.”

On Oct. 1, 2000, in answer to these concerns, the E-Sign Act took effect. E-Sign established a uniform federal framework for validating electronic commerce transactions. E-Sign allows electronic signatures for two scenarios: a transaction that occurs in “electronic form,” and a transaction that utilizes an electronic signature or electronic record. In both of these scenarios, E-sign upholds the effects of electronic transactions regardless of the type of method of electronic record or signature employed by the transacting parties.

E-Sign applies only to transactions where parties have agreed to do business electronically—through the Internet or other electronic methods. In addition, where an existing law requires that information relating to a transaction be made available to a consumer in writing, a consumer must affirmatively consent to an electronic record in place of the written record, and must be provided with an easy to understand way to withdraw such consent.

E-Sign does not change existing state law regarding the necessity or effect of signatures. It merely provides one more way for such signatures to be recorded.

Inside Electronic Signatures and E-Sign