One Year Ago: E-Signature Bill Passes Senate

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Originally published on November 22, 1999 and brought to you today as a time capsule.

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The U.S. Senate passed the Millennium Digital Commerce Act Friday, following in the footsteps of the House of Representatives, which recently passed a similar measure to make electronic signatures legally binding.

However, because the bills are not identical, the electronic signature issue is notyet ready for the President's signature. The two bills must be reconciled by a conference committee of House and Senate members and then be approved by each chamber.

The Senate measure contains additional consumer protection language to require that electronic contracts be reproduced in hard copy form and ensure that the electronic contracts accurately reflect the full nature of the agreement. This non-controversial language is not expected to hold up final passage of the bill.

Backed By Presidential Candidate

Sen. Spencer Abraham (R-Michigan) shepherded the bill through the Senate, with backing from Commerce Committee Chairman and Republican presidential candidate John McCain (R-Arizona). The bill adopts principles from the United Nations' Model Law on Electronic Commerce, adopted in 1996 to make use of electronic transactions secure and effective for international commerce.

The Abraham bill does not specify electronic signature technologies that are acceptable or not acceptable, instead letting parties to a transaction agree on a technology or choose to use traditional paper contracts to close deals.

The electronic signatures would be just as legally binding as ink signatures.

The bill also directs each federal agency to report to the Office of Management and Budget and the U.S. Secretary of Commerce on any current laws or other regulations that currently pose barriers to electronic transactions. The Secretary of Commerce must then report to Congress, suggesting any new legislation or action by federal agencies to remove those barriers.

Move To Accelerate Acceptance

This move by Congress to validate the use of electronic signatures will accelerate the acceptance of the Internet as a commercial marketplace for consumers and businesses, Abraham said. "The Internet is poised to serve as an efficient new tool for companies to transact business as never before. The development of electronic signature technologies now allows organizations to enter into contractual arrangements without ever having to drive across town or fly thousands of miles to personally meet with a client or potential business partner."

Abraham, a member of the Senate Commerce Committee and the Small Business Committee, is also the author of the Anti-Cybersquatting Consumer Protection Act and the Electronic Securities Transactions Act.

Both measures are still working their way through Congress.