October 1, 2000

New Electronic Signature Legislation Validates On-line Contracting

Arnold & Porter Advisory

On October 1, 2000, the Electronic Signatures in Global and National Commerce Act ("E-Sign Act")1 took effect, representing a landmark in the evolving legal framework governing electronic commerce. The fundamental purpose of the new law is to establish that a signature, contract or record relating to a transaction involving interstate or foreign commerce may not be denied legal effect or enforceability simply because it is in an electronic form. The states have been incrementally adopting legislation to this effect with respect to intrastate transactions, but less than half have done so to date and the laws they have enacted vary considerably. As a means to eliminate the obstacles to efficient interstate on-line transactions posed by the different states’ laws and the uncertainties created by the absence of such laws, the E-Sign Act prescribes uniform national standards, while also allowing states to maintain their own measures if they conform to the federal standards.

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