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Electronic Signatures in Global and National Commerce Act

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Citation Edit

Electronic Signatures in Global and National Commerce Act (E-Sign), Pub. L. No. 106-229 (June 30, 2000).

Overview Edit

The Act was enacted June 30, 2000 by Congress to give electronic records and signature the same force and effect as traditional contracts written on paper. The first section of the Act states that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” Under E-Sign, companies can contract online to buy and sell a broad array of products and services. Businesses can use servers the size of a laptop to collect and store transaction records that once filled up vast warehouses. Consumers can buy insurance, get a mortgage, or open a brokerage account online, without waiting for physical documents to be mailed back and forth. E-Sign offers improved efficiencies in U.S. markets.

E-Sign eliminates barriers to electronic commerce, while also providing consumers with protections equivalent to those available in the world of paper-based transactions. The Act makes clear that no person is required to use electronic records, signatures, or contracts. Indeed, E-Sign requires that a consumer affirmatively consent to the use of electronic notices and records. Prior to consenting, the consumer must receive notice of his or her rights. Moreover, the consumer must provide the affirmative consent electronically, in a manner that reasonably demonstrates that the consumer can access the electronic records that are the subject of the consent.

E-Sign applies broadly to Federal and state statutes and regulations governing private sector (including business-to-business and business-to-consumer) activities. The Act generally covers legal requirements that information be disclosed in private transactions. It also requires that agencies generally permit private parties to retain records electronically. The government may establish appropriate performance standards for the accuracy, integrity, and accessibility of records retained electronically, to ensure compliance with applicable laws and to guard against fraud.

Subsequent provisions also allow for the retention of records in electronic format so long as those electronic records “accurately reflect” the substance of the physical contract.

Federal agency activities and requirements that involve information, but do not relate to business, commercial, or consumer transactions, are not within the scope of this legislation. Instead they are addressed by the Government Paperwork Elimination Act (GPEA). Certain laws and regulations involve both GPEA and E-Sign, especially with respect to record retention requirements in agency regulations that relate to business, consumer and commercial transactions.

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