Are digital signatures legally binding?

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Antonio Jobeem recently purchased a single-family home in New Orleans. It’s no big deal, except Antonio lives in Brazil and signed on the “E” line. On line deals can explode now that President Clinton signed the Electronic Signatures in Global and National Commerce Act, or “E-Sign”, in June (effective October 1). No contract, signature or record can be denied legal status just because it is electronic. This means that fax and digital signatures are valid. Eviction notices, some court documents, termination of utility services, foreclosure, defaults, wills, trusts, adoptions, divorce, the UCC (with some exceptions), product recalls, hazardous materials documents, and health insurance information must still come by paper snail mail. Businesses must get consent from its customers for electronic dealings, must provide a clear and conspicuous statement about consumers right to receive documents in non “E” form, and right to revoke consent. Businesses must also provide a statement of hardware and software requirements for access, as well as record keeping. A new consent must be obtained when changes in hardware or software materially affect the consumer.

While business to business internet companies have been using E-signatures for some time now, a recent survey of managers at 250 small and medium non-Internet companies conducted for showed that less than half knew what a digital signature was. New technology such as E-Sign, and personal merchant accounts that allow individuals to accept credit cards from each other, are backed by the courts and will be enforced in interstate commerce.

While PIN and passwords are often insecure, digital signatures are sent using two numerical “keys”. One key is kept secret and the other is stored in an electronic vault. The sender signs by typing in a password that encrypts the data, and the receiver verifies the signature with another key. A digital certificate confirming identities accompanies the transaction.

The ABA Science and Technology Section set its own digital guidelines on Digital identity certificates, a prerequisite for E-Signing, may be obtained from CertCo, Digital Signature Trust, Entrust Technologies Inc., VeriSign Inc., and eOriginal.