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DIGITAL SIGNATURES AND THE
INTERNET
July 7, 2000
Obviously, more and more
communication is being conducted via
the Internet or e-mail. Both
business and consumer transactions
are involved. Items of substantial
monetary value are purchased and
shipped by agreement and direction
established and documented solely in
an electronic form. In addition,
instructions are issued that can
have substantial economic
consequences. Examples include
directions or responses provided
during the execution of large
construction or manufacturing
projects and for which confirming
“hard copy” correspondence is not
provided.
In the event of a dispute, this
new communication method can cause
problems of establishing the
authentication or validity of the
electronic communication. An obvious
issue may be whether the party to
whom it is attributed did, in fact,
send the e-mail message. In the
antiquated days prior to the 1990’s,
contracts were signed, and sometimes
witnessed and the signatures
acknowledged to be authentic in the
presence of a notary (a person
registered and empowered by the
state to seal the validity of the
signature. Although directions were
given verbally, that was commonly
understood to be a poor business
practice. The necessity of
confirming documentation was well
understood. Facsimile messaging also
provided the ability for near
instantaneous transmission of signed
written communication.
It is not well understood that
e-mail and Internet communication
does not provide this same formality
and basis for validation. In fact,
in this electronic age, computer
viruses and hackers appear to be
more prevalent than forgers of
written documents. Technology for
creating “digital signatures” has
existed for some time. This appears
to be part of the major operating
system software programs. However,
there has been little legal
recognition or validation of these
software programs. The Uniform
Computer Information Transaction Act
(UCITA) does not address digital
signatures. However the Uniform
Electronic Transactions Act (UETA)
has been drafted to fill this gap.
The final draft was agreed to in
July 1999. It has not yet been
adopted by any state, but has been
introduced as a bill in Colorado,
Indiana, Maryland, Nebraska, Ohio
and Virginia.
Section 7 of UETA states in part
that:
“A record or signature may
not be denied legal effect or
enforceability solely because it
is in electronic form.
A contract may not be denied
legal effect or enforceability
solely because an electronic
record was used in its
formation.
If a law required a record to
be in writing, an electronic
record satisfies the law.”
If a signed written document is
required by law in order that the
transaction or communication be
valid and binding, an electronic
signature meeting the requirements
of UETA will satisfies the law.
The applicability of these
provisions, however, requires
utilization of encryption
technology. The encryption must make
the document unreadable prior to the
transmission such that only a party
possessing the key for the decoding
may read it. There must also be
separate encryption of elements of
the document to show authorization
by the sender. This is sometimes
called the “digital signature.” This
obviously is not merely the use of a
legible script “personal signature”
that can be created by standard
computer operating systems.
It can be expected that we will
all have to become more familiar
with encryption software as we
participate in the growing
e-commerce.
© David McEwing, 2000
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