Digital Signatures Pass Senate Commerce Committee

Among the flurry of votes Wednesday by the Senate Commerce Committee, Senator Spencer Abraham’s (R-Michigan) S.761 Millennium Digital Commerce Act won approval with minimal tinkering by committee members. As previously reported, the bill would make little substantive change in U.S. policy but would officially endorse the use of digital signatures in electronic transactions.

“Internet users are ready to go far beyond buying books and apparel on-line,” Abraham said Wednesday. “The Internet is set to lead a revolution in the execution of business transactions involving thousands or millions of dollars in products and services — transactions so important they require that both parties enter into legally binding contracts.”

Abraham’s bill would ensure that individuals and organizations in different states stick to their online agreements and obligations despite the existence of different e-commerce rules in each state. By pre-empting state law, the bill would make all electronic contracts and sales agreements made within the United States binding if they are sealed with an electronic signature.

Careful not to step too firmly on states’ rights, however, Abraham called the bill “an interim measure until the states enact uniform standards which are consistent with S.761 or the Uniform Electronic Transactions Act.”

The bill would not ordain one set of standards, instead allowing private sector companies and individuals to choose their preferred digital signature technology. It also sets out “principles for international use of electronic signatures” to encourage their expansion in world markets. Finally, the bill directs the Department of Commerce and the Office of Management and Budget to report on federal regulations that might pose barriers to electronic commerce. They must report to Congress on those problems and provide suggestions for reform.

The bill now awaits approval by the full Senate, but a vote had not been scheduled at press time. A companion measure is awaiting a full in the House of Representatives as well.

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