During the Clinton Administration, the President signed the E-Signatures Act into law, giving digital signatures in commercial transactions the same force as pen and paper. With most states continuing to debate the Uniform Computer Information Technology Act (UCITA), a law resolving numerous e-commerce issues, the federal government took the opportunity to forge ahead despite lingering questions.

E-signatures simplify the previously cumbersome practice of transferring documents electronically, only to have to print, sign, and re-scan the document.

This law revolutionizes commercial contracts. Now, documents can be sent electronically, signed electronically, and stored electronically. Paper is no longer needed. Easier to maintain, electronic documents will save billions of dollars in administrative costs and cut transaction time, not to mention saving space and waste.

At the heart of e-signatures is the use of encryption programs. With no current industry standard, consumers have an array of choices. At one end, public encryption programs produce an invisible signature. This consumer un-friendly program forces users to trust that the computer correctly verified the signed document.

At the other extreme, users should be wary of programs that simply send pictures of a signature. Such signatures can be easily copied and forged. If you prefer to see a signed name at the bottom of an electronic document, a second program should be used to verify the signature.

Luckily, the E-Signatures Act is technology neutral. One popular combination of hardware and software gives users the feeling of signing a document. A computer pen and an LCD screen is used with software that authenticates the signature based on the pattern of pressures created in signing the electronic document. As many as 30 different identification parameters are used in determining whether the signature is genuine or a forgery. A second e-signature program attaches a coded message to the signature line that can only be decoded by the intended recipient.

Other e-signature technologies do not require a written signature. One program verifies an individual's assent to a document through the use of a scanned thumbprint on an electronic pad. Other programs scan the signer's face or eye. These programs can be used alone or in conjunction with a written signature.

The Act also leaves some questions unanswered. As e-commerce expands its geographical reach, there continue to be questions on jurisdiction and applicable law. In many cases, answers can only be found on a global-scale. Currently, there is disagreement among countries with national e-signatures laws. Some laws are technology biased preferring software packages that verify pressure patterns of a written signature. Other countries restrict the use of e-signatures to certain transactions. The United States only allows e-signatures in commercial transactions, which excludes the use of e-signatures for other legal and government documents.

With a number of issues left open by the E-Signatures Act, businesses should take steps to insure the validity of their electronic contracts. The language of the contracts themselves is probably the best means of ensuring that a contract will be enforced. The contract should indicate the state and applicable laws to be used in the event of a dispute. Preferably, the state chosen will have already adopted UCITA, or another e-signature law. The New Jersey UCITA law is currently before the legislature. The contract should also plainly state that all parties expect the electronic contract to be fully enforceable.

Despite this bit of uncertainty, businesses should continue to expand into e-commerce. As the use of e-signatures in commercial contracts becomes the norm, standards will develop and fewer legal questions about e-signatures will exist. The government and legal system will increasingly accept e-signatures moving the world ever closer to a paper-free world.

"This article is prepared by Miller & Mitchell, P.C. We do not recommend acting on the information contained in this article without obtaining specific professional advice. These articles focus on broadly applicable legal principles. Contact Miller & Mitchell, P.C. for legal counsel."

For more information on e-policy and other workplace issues, contact Miller & Mitchell, P.C. rmiller@millermitchell.com

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