Recent Action on Electronic Authentication Legislation

Washington, DC, June 29, 1999 - Three bills were recently introduced in Congress that address the use of electronic signatures and electronic records. There has been action on two of these. On June 24th, the House Commerce Committee held a hearing on H.R. 1714, the "Electronic Signatures in Global and National Commerce Act" (introduced by Commerce Committee Chairman Thomas Bliley (R-VA)). The hearing focused on Title III of the bill (governing use of electronic records and signatures under federal securities law).

On June 23rd, the Senate Commerce Committee marked up S. 761, the "Millenium Digital Commerce Act" (introduced by Senator Abraham (R-MI)). In particular, the bill was revised to reflect certain views expressed by the Department of Commerce on the legislation. In its revised form, S. 761 tracks portions of the current draft of the NCCUSL-sponsored Uniform Electronic Transactions Act ("UETA"). Thus, while S. 761 does not address all of the areas addressed by the UETA, it is consistent with it, and it uses the same terminology. In fact, S. 761 is designed to serve as an interim measure that would facilitate electronic transactions under federal standards until states adopt the UETA. It would recognize the validity of electronic signatures and electronic records as substitutes for written signatures and records in commercial transactions. In addition, it would allow parties to a transaction to establish the terms and conditions on which they will use electronic signatures and electronic records, including the "methods" to be used. The operative provisions of S. 761 would not apply in any state in which the UETA is in effect.

The primary difference between S. 761 and the UETA relates to the types of transactions to which they would apply. Unlike the UETA, S. 761 would not apply to transactions in which the federal or a state government (or a government agency) is a party. Conversely, in contrast to S. 761, the UETA would not apply to wills, codicils or testamentary trusts, or transactions governed by the Uniform Commercial Code. The UETA also would allow states to specify other laws whose requirements would not be affected by it. For example, if a state has a statute requiring that consumer credit agreements be in writing, the state could retain that requirement when it adopts the UETA by specifying that the UETA does not affect that statute. Since S. 761 would defer to the UETA, S.761 would also allow a state to retain that requirement.