G. Bradley Hargrave
Electronic commerce has revolutionized the manner in which most goods and services are delivered to the public. Within this context, the Clinton Administration announced in July of 1997 a "Framework for Global Electronic Commerce" which called for the creation of a uniform set of laws, along the lines of the Uniform Commercial Code, to cure some of the uncertainties plaguing the validity of electronic records and documents that are created to evidence the huge volume of commercial transactions taking place over the internet. This July, the National Conference of Commissioners of Uniform State Laws (the "NCCUSL") will finalize the "Electronic Transactions Act" (the "Act") for presentation to every state legislature and its ultimate passage into law. While the Act cannot possibly answer every question raised by electronic commerce, it will eliminate, among other things, the current legal bias against electronic records and digital signatures.
The fundamental purpose of the Act is to remove barriers to electronic commerce by squarely addressing the following issues: the authentication of the identity of the originator of an electronic record, legal recognition of electronic signatures, the retention of records by electronic means, the integrity of electronic records transmitted over networks, the formation and validity of electronic contracts and the legal liability of service providers. Of these issues, perhaps the most significant treatment has been given to the validity of digital signatures and the formation of electronic contracts.
The Act clarifies that digital signatures have the same legal binding effect as that of written signatures and sets forth some evidentiary presumptions for such signatures and the documents to which they are attached, provided these signatures are created in accordance with a secure procedure. The Act also resolves the ambiguities which presently exist regarding the time and place at which an electronic contract is formed. It provides that the acceptance of an offer giving rise to a binding contract occurs at the time it is transmitted or enters the offeror's system. It also states that the place that the acceptance is dispatched, and the place it is received, are the regular places of business or residences of the respective parties to the contract, thus providing some jurisdictional certainty in the event of a dispute.
The NCCUSL has taken a very flexible approach in the drafting of the Act in order to permit its continuing application to new and developing technologies. As a result, much of the Act speaks in terms of whether it is "reasonable", based on a totality of the circumstances, to bind a party to a purely electronic contract. While this approach is laudable in terms of providing for the inclusion within the Act of new technologies, an approach based primarily on a "reasonableness" standard may also introduce new uncertainties into the world of electronic commerce which in turn might create new problems. As one commentator wryly noted, "reasonable" in the law is often spelled "l-a-w-s-u-i-t." Whether the Act fulfills its mission of eliminating barriers to electronic commerce, or simply creates new employment opportunities for enterprising attorneys, remains, at least for the time being, an open question.
