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Digital Signatures; What Are They? A digital signature is any data that electronically identifies and authenticates the origin of that information or electronic record. This may be in the form of a digitized picture of your signature, a special code that you assign to the information being sent or simply an acknowledgment through various means that the sender is accepting or agreeing to the contents of the information contained in the document. Digital signatures may be in various forms, some of which are displayed below:
Thus, as you can see, without more, a digital signature’s primary function is to identify the origin of the signature. That is, identify the digital mark with a particular computer or user of a computer. A digital signature does not certify that the user of the computer sending the information is the user authorized to send that information through that user’s account. Thus, currently, there is no procedure for notarizing a digital signature as there is for notarizing a handwritten signature on a written document (e.g., using a notary to verify a signature). Electronic Signature Laws Colorado In June, 1999, the Colorado General Assembly based a bill, the Government Electronic Transactions Act, which Governor Bill Owens signed into law effective July 1, 1999. The significance of the Act is that it recognized electronic signatures as having the same force and effect as a manual signature on a paper based document. The relevant sections are reprinted here for your reference. 24-71-101.
Electronic signatures. (1)
As used in this article, "electronic signature" means any identifier
or authentication technique attached to or logically associated with an
electronic record that is intended by the person using it to have the same force
and effect as the use of a manual signature. "Electronic signature"
includes digital signatures. 24-71.1-103. Definitions. As used in this article, unless the context otherwise requires: (4) "Electronic signature" means any identifier or authentication technique attached to or logically associated with an electronic record that is intended by the person using it to have the same force and effect as a manual signature. "Electronic signature" includes digital signatures. Federal At the national level, the United States House of Representatives and the Senate passed the Electronic Signatures in Global and National Commerce Act and President Bill Clinton signed the Act making it the law of the United States on June 30, 2000. The law provides in part: (a)(1)
No statute . . . or other rule of law shall deny the legal effect of [a]
contract . . . on the ground that the instrument is not in writing if the
instrument is an electronic record; and Thus, the federal law “preempts” or is the primary authority over any individual state’s law. This means that Colorado law may not diminish the rules under the federal statute. Interestingly, the Colorado law adopts many of the broad definitions included in the federal law and this article will discuss these features below. Previous federal laws enacted before the Electronic Signatures in Global and National Commerce Act included:
The essential features of the “Electronic Signatures in Global and National Commerce Act” (“The Act”) are that the Act creates legal validity for electronic signatures. The Act defines electronic signatures broadly, such that, an electronic signature may be a mark that is other than a reproduction of a persons handwritten signature (e.g., not just an electronic reproduction of a person’s signature like a photocopy machine). Specifically, the Act provides that:
General Rules for Electronic Signatures The “Electronic Signatures in Global and National Commerce Act” (“The Act”) provides validity that a signature, contract, or other record related to any transaction in or affecting interstate or foreign commerce may not be denied legal effect, validity, or enforceability solely because it is in electronic form. And, for Colorado businesses, a Colorado business may not rely on the fact that the transaction in question (e.g., a disputed transaction between two parties), is between a Colorado business and a Colorado consumer and avoid the ramifications of The Act because, it will be argued that by employing the internet as the vehicle to enter into and complete the transaction, the parties are using interstate commerce, and therefore are subject to the federal rules. It is important to remember that there is not a broad area of legal cases in this area. Thus, any “legal” analysis will likely be based on traditional contract laws, and The Act, and the Colorado statutory scheme, will add validity to enforceability absent fraud to induce a party to enter into the transaction, the issue of unauthorized use of the computer to enter into the transaction, or the unauthorized use of a consumer’s electronic identity. The real power in The Act comes from the definition of “electronic signatures” as an electronic sound, symbol or process, attached logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record, and from the definition of “electronic record” that include all notices, disclosures or any writing communicated by electronic means. The definition is sufficiently broad to encompass the burgeoning e-commerce area of all businesses whether they are traditional brick and mortar businesses with an internet presence or exclusively an internet business. Under The Act, the term “transaction” is defined broadly as well and includes any unilateral action or set of actions by one of the parties to the underlying transaction, or by any other person with any interest in the underlying transaction, or a response by one party to the other’s action. Legislative intent (e.g., the U.S. Senate) declares that it is the nature of the activity, rather than the number of persons or the identity or status of the person or entity involved in the activity, that determines the applicability of The Act. What does this mean? Simply, that any activity that is designed to create a business relationship or induce a party into a business relationship for whatever purpose will be deemed a “transaction” and will cause the activity to fall under rules imposed by The Act. What Laws Control? Colorado or Federal? Federal law, The Act, controls. State law (e.g., Colorado laws) may only add protection under The Act, and my not reduce any of the duties or protections afforded by the federal laws (e.g., The Act). While this may seem complicated, it may be simplified for Colorado businesses because the Colorado electronic signatures laws follow the federal rules for the most part and Colorado business should not notice any significant inconsistencies in the treatment of e-contracts from paper contracts, so long as, Colorado businesses are mindful of the types of transactions that are exempt under The Act. Remember, certain documents MUST BE IN WRITING to be valid. Those include wills, real property deeds, certain transactional documents under the Uniform Commercial Code as adopted in Colorado and others (please see the complete version of The Act or consult legal counsel). Conclusion Electronic signatures are valid in Colorado and in the United States. Thus, a Colorado business may engage in e-commerce with residents of Colorado or any other jurisdiction and if the parties agree, the contract is valid and so are the electronic means to sign the document. Electronic signatures can be any electronic sound, symbol or process that is logically attached or related to the agreement that signifies acceptance by the parties to the terms of the agreement. Caution should be exercised by Colorado businesses when engaging in transactions electronically with consumers because certain transactions may not be conducted by electronic means. Thus, before a Colorado business engages in any transaction with a consumer that is not a traditional e-commerce sale and purchase agreement typically conducted in a brick and mortar store by cash or credit card, legal counsel should be consulted to verify compliance with The Act and Colorado laws. It is important to remember that caution should be exercised when contracting electronically with Companies or individuals that are outside the legal jurisdiction of the United States, in that, affecting contractual compliance with foreign entities or individuals may be impossible or overly expensive. So, just like with any business transaction, the prudent course in doing business electronically is to always exercise good business judgment. Copyright © 2000, ScrantonPC.com |