The primary electronic commerce provisions of E-sign are contained in Title I,
which establishes a legal framework relating to electronic transactions in or
affecting interstate or foreign commerce. Generally, Title I contains provisions that
relate to the use of "electronic records" and signatures in covered transactions, the
retention of "electronic records" of covered transactions, and the notarization and
acknowledgement of covered electronic transactions. Title I broadly defines the term
"electronic record" to include, among other things, any information that is stored by
means of electrical or digital technology and that is retrievable in perceivable form.
This definition likely covers such things as information stored on a computer disk or
a voice mail recording. Because of this broad definition, in this analysis of E-sign,
the term "document" is generally used in place of the term record. Title I also defines
"transaction" broadly to mean any action or set of actions relating to the conduct of
business, consumer, or commercial affairs between two or more persons, including
governmental agencies.
Currently, under Title I, a signature, contract, or other document relating to a
covered transaction may not be denied legal effect, validity, or enforceability solely
because it is in an electronic form, as long as the electronic contract or record, if it
is otherwise required to be in writing, is capable of being retained and accurately
reproduced by the relevant parties. Similarly, a contract relating to a covered
transaction may not be denied legal effect solely because an electronic signature or
electronic document was used in its formation.
Title I also permits electronic notarization, acknowledgement, or verification
of a signature or document relating to a covered transaction, as long as the electronic
signature of the person performing the notarization, acknowledgement, or
verification is accompanied by all other information required by law. In addition,
Title I provides that no person is required under Title I to agree to use or accept
electronic records or signatures.
However, under Title I, any law that requires retention of a contract or
document relating to a covered transaction may be satisfied by retaining an
electronic document, as long as the retained information satisfies certain
requirements relating to accuracy and accessibility. Title I contains similar
provisions with regard to laws requiring retention of a check. An electronic contract
or document retained in compliance with these provisions generally has the same
legal status as an original document. As discussed above with regard to public
records custodians, this provision of Title I also likely permits any private custodian
of records relating to covered transactions to destroy original records if a proper
electronic copy is retained.
Consumer protections
Under Title I, with regard to consumer transactions in or affecting interstate
or foreign commerce, existing laws requiring written disclosure currently may be
satisfied electronically only if the consumer consents after being informed of certain
rights and of the technical requirements necessary to access and retain the electronic
document. In addition, the consumer must consent or confirm his or her consent
electronically in a manner that reasonably demonstrates that the consumer can
access the information that is required to be provided to the consumer. The legal
effect of a contract, though, may not be denied solely because of a failure to obtain
the consumer's electronic consent consistent with this requirement. Title I also
specifies that the use of electronic documents permitted under these consumer
provisions does not include the use of an oral communication, such as a voice mail
recording, unless that use is permitted under other applicable law.
Any federal regulatory agency, with respect to a matter within the agency's
jurisdiction, may exempt a specified category or type of document from the general
consumer consent requirement, if the exemption is necessary to eliminate a
substantial burden on electronic commerce and will not increase the material risk
of harm to consumers.
Exemptions
All of the following are exempt from coverage under the primary electronic
commerce provisions of E-sign and, as a result, currently may not be provided in
electronic format unless otherwise authorized by law:
1. A document to the extent that it is governed by a law covering the creation
and execution of wills, codicils, or testamentary trusts.
2. A document to the extent that it is governed by a law covering adoption,
divorce, or other matters of family law.
3. A document to the extent that it is governed by certain sections of the
Uniform Commercial code.
4. Court orders or notices and official court documents, including briefs,
pleadings, and other writings.
5. Notices of cancellation or termination of utility services, including water,
heat, and power.
6. Notices of default, acceleration, repossession, foreclosure, or eviction or the
right to cure under a credit agreement secured by, or a rental agreement for, a
primary residence of an individual.
7. Notices of the cancellation or termination of health insurance or life
insurance, other than annuities.
8. Product recall notices.
9. Documents required to accompany the transportation of hazardous
materials.
A federal regulatory agency may remove any of these exemptions, as the
particular exemption applies to a matter within the agency's jurisdiction, if the
agency finds that the exemption is no longer necessary for the protection of
consumers and that the elimination of the exemption will not increase the material
risk of harm to consumers.
Limits on the scope of Title I
In addition to these specific exemptions, Title I has a limited effect upon certain
specified laws. For example, Title I states that it does not affect any requirement
imposed by state law relating to a person's rights or obligations other than the
requirement that contracts or other documents be in nonelectronic form. However,
this provision may conflict with other provisions of Title I which appear to
specifically affect obligations other than writing or signature requirements. Title I
also has a limited effect on any state law enacted before E-sign that expressly
requires verification or acknowledgement of receipt of a document. Under Title I,
this type of document may be provided electronically only if the method used also
provides verification or acknowledgement of receipt. In addition, Title I does not
affect any law that requires a warning, notice, disclosure, or other document to be
posted, displayed, or publicly affixed within a specified proximity.
State authority under Title I
Title I provides that a state regulatory agency that is responsible for rule
making under any statute may interpret the primary electronic commerce provisions
of Title I with respect to that statute, if the agency is authorized by law to do so.
Rules, orders, or guidance produced by an agency under this authority must meet
specific requirements relating to consistency with existing provisions of Title I; to
regulatory burden; to justification for the rule, order, or guidance; and to neutrality
with regard to the type of technology needed to satisfy the rule, order, or guidance.
A state agency may also mandate specific performance standards with regard to
document retention, in order to assure accuracy, integrity, and accessibility of
retained electronic documents. However, under state law, the rule-making
authority of a state agency is limited to interpretation and application of state law
and no state agency may promulgate a rule that conflicts with state law.
Relationship between E-sign and UETA
With certain exceptions, E-sign preempts state laws that are inconsistent with
its provisions. One of the exceptions permits a state to supersede the effect of the
primary electronic commerce provisions of Title I by enacting a law that constitutes
an enactment of UETA. However, a state may not use the optional provision in UETA
that permits a state to insert exemptions relating to specific areas of state law from
the application of UETA as a loophole to avoid the requirements of E-sign. If a state
enacts UETA without significant change and containing no new exemptions under
this provision of UETA, the state enactment of UETA will likely not be preempted
by E-sign.
Because this bill makes no significant changes to the substance of UETA and
the text is consistent with the intent of the version of UETA recommended for
enactment in all of the states, the bill likely qualifies for this exception from
preemption and, if enacted, would likely supplant the primary electronic commerce
provisions of E-sign in this state. However, certain provisions of UETA and, as a
result, this bill, are susceptible to varying interpretations. Many of these provisions
are similar to current law under E-sign. This bill generally does not clarify these
provisions. Rather, in order to avoid preemption, the text of this bill generally
remains consistent with the recommended version of UETA.
UETA
The following analysis of the version of UETA contained in this bill generally
reflects an interpretation that is consistent with the prefatory note and official
comments accompanying UETA, which generally discuss the intent of each
recommended provision of UETA. For the provisions that are subject to varying
interpretations, this analysis discusses each primary interpretation and indicates
which interpretation, if any, is supported by the prefatory note or comments.
Although the prefatory note and comments have no legal effect, in the past courts
have often relied on the prefatory notes and comments to other uniform laws when
interpreting ambiguous provisions of those laws. In some instances, the
interpretation supported by the prefatory note or comments is difficult to derive from
the text of the bill.
Public records
This bill includes a provision potentially affecting the maintenance of public
records that is similar to the provision currently in effect under E-sign. With certain
exceptions, the bill permits a person to satisfy any law that requires retention of a
document by retaining an electronic document, as long as the retained information
satisfies certain requirements relating to accuracy and accessibility. Like current
law under E-sign, this provision may be interpreted to permit a custodian of a public
record relating to a transaction to destroy the original record and retain an electronic
copy, notwithstanding other current statutes regarding the conversion of public
records into electronic format and retention requirements.
However, this interpretation is less likely to occur under this bill than it is in
current law under E-sign. Unlike E-sign, this bill specifically states that it applies
only to transactions between parties each of which has agreed to conduct
transactions by electronic means. (See discussion under "Electronic Documents and
Signatures in Commerce" (subheading "Applicability and definitions") below.)
Although the definition of "transaction" may be interpreted broadly to include a
typical governmental action like the filing of a document, the prefatory note and
comments to UETA imply that a narrower interpretation is intended which covers
only the actions of the government as a market participant. Thus, if interpreted
consistently with the prefatory note and comments, the electronic document
retention provisions will likely apply to the parties to a transaction, rather than to
a governmental unit that stores public records relating to the filings and
transactions of others.
This bill also provides that a person may comply with these electronic document
retention provisions using the services of another person. If the term "transaction"
is interpreted broadly, this provision may permit a public records custodian to
transfer public records to other governmental or private parties for retention.
However, if the term "transaction" is interpreted consistently with the prefatory note
and comments to UETA, this provision generally would not apply to a public records
custodian's retention of most public records.
Acceptance of electronic documents by governmental units
The same ambiguities regarding the acceptance of electronic documents by
governmental units exist under this bill as exist currently under E-sign, although
under this bill it is more likely that a governmental unit is not required to accept
electronic documents. This bill attempts, in a manner consistent with UETA, to
restore the law as it existed in this state before E-sign regarding the acceptance of
electronic documents by governmental units. Thus, under this bill, any document
that is required by law to be submitted in writing to a governmental unit and that
requires a written signature may be submitted in an electronic format if the
governmental unit consents. Although this bill, like current law under E-sign, also
states that a document relating to a transaction may not be denied legal effect solely
because it is in electronic form, it is more likely under this bill that this provision has
no effect on the authority of a governmental unit to refuse to accept an electronic
document. Unlike current law under E-sign, this bill does not contain any statement
that a governmental unit is required to accept an electronic document.
This bill also requires any governmental unit that adopts standards regarding
the governmental unit's receipt of electronic records or electronic signatures to
promote consistency and interoperability with similar standards adopted by other
governmental units, the federal government, and other persons interacting with
governmental units of this state.
Electronic documents and signatures in commerce
Rule of construction
This bill specifies that it must be construed and applied to facilitate electronic
transactions consistent with other applicable law, to be consistent with reasonable
practices concerning electronic transactions and with the continued expansion of
those practices, and to bring about uniformity in the law of electronic transactions.
Applicability and definitions
Generally, the bill applies to the use of electronic records and electronic
signatures relating to transactions. Like current law under E-sign, this bill broadly
defines the term "electronic record" to include, among other things, any information
that is stored by means of electrical or digital technology and that is retrievable in
a perceivable form. This definition would likely cover such things as information
stored on a computer disk or a voice mail recording. Because of this broad definition,
in this analysis of the version of UETA contained in this bill, the term "document"
is generally used in place of the term "record." Under the bill, an "electronic
signature" includes, among other things, a sound, symbol, or process that relates to
electrical technology, that is attached to or logically associated with a document, and
that is executed or adopted by a person with intent to sign the document.
The bill defines "transaction" to mean an action or set of actions between two
or more persons relating to the conduct of business, commercial, or governmental
affairs. Although this definition may be interpreted broadly to include a typical
interaction with the government like the filing of a document, the prefatory note and
comments to UETA imply that a narrower interpretation is intended which covers
the actions of the government as a market participant. In addition, although the
definition does not expressly cover consumer-to-consumer or
consumer-to-business transactions, it is possible to interpret this definition,
consistent with the official comments, to cover these transactions.
This bill, like current law under E-sign, does not apply to a transaction
governed by a law relating to the execution of wills or the creation of testamentary
trusts or to a transaction governed by any chapter of this state's version of the
Uniform Commercial Code other than the chapter dealing with sales of goods.
However, because this bill does not contain all of the exemptions currently in effect
under E-sign, this bill may permit a broader use of electronic documents relating to
transactions than is currently permitted under E-sign. Unlike current law, this bill
may permit the use of electronic documents for matters relating to family law;
electronic court documents; electronic notices of the cancellation of utility services;
electronic notices of default, acceleration, repossession, foreclosure, or eviction or the
right to cure under a credit agreement secured by, or a rental agreement for, an
individual's primary residence; electronic notices of the cancellation or termination
of health insurance or life insurance; and electronic notices of product recalls.
Agreements to use electronic documents and electronic signatures
This bill does not require the use of electronic documents or electronic
signatures. Rather, the bill applies only to transactions between parties each of
which has agreed to conduct transactions by electronic means. Under the bill, this
agreement is determined from the context, the surrounding circumstances, and the
parties' conduct. A party that agrees to conduct one transaction by electronic means
may refuse to conduct other transactions by electronic means. Although the bill also
states that a document relating to a transaction may not be denied legal effect solely
because it is in electronic form, it is likely that, consistent with the comments, these
provisions permit a person to deny the legal effect of an electronic document relating
to a transaction if a party to the transaction never agreed to conduct the transaction
electronically. With certain exceptions, the parties to any transaction may agree to
vary the effect of this bill as it relates to that transaction.
Consumer protections
Unlike current law under E-sign, this bill does not contain any protections that
specifically apply only to consumers. The consumer protections currently in effect
under E-sign would likely have no effect in this state upon the enactment of this bill.
Legal effect of electronic documents and electronic signatures
As noted earlier, this bill specifies that a document or signature may not be
denied legal effect or enforceability solely because it is in electronic form. The bill
also specifies that a contract may not be denied legal effect or enforceability solely
because an electronic document was used in its formation. These provisions are
similar to provisions in current law under E-sign. Unlike E-sign, this bill further
states that an electronic document satisfies any law requiring a record to be in
writing and that an electronic signature satisfies any law requiring a signature.
Effect of laws relating to the provision of information
Under this bill, if the parties to a transaction have agreed to conduct the
transaction electronically and if a law requires a person to provide, send, or deliver
information in writing to another person, a party may, with certain exceptions,
satisfy the requirement with respect to that transaction by providing, sending, or
delivering the information in an electronic document that is capable of retention by
the recipient at the time of receipt. Although the bill also states that a document
relating to a transaction may not be denied legal effect solely because it is in
electronic form, it is likely that, consistent with the comments, the bill permits a
person to deny the legal effect of an electronic document relating to a transaction if
the electronic document is provided, sent, or delivered in violation of this provision.
The bill further provides that an electronic document is not enforceable against the
recipient of the document if the sender inhibits the ability of the recipient to store
or print the document.
The bill also specifies that, with certain exceptions, a document must satisfy
any law requiring the document to be posted or displayed in a certain manner; to be
sent, communicated, or transmitted by a specified method; or to contain information
that is formatted in a certain manner. There are three possible interpretations of this
provision. First, the provision may prohibit the use of an electronic document if a law
requires the document to be posted, displayed, sent, communicated, transmitted, or
formatted on paper. Second, the provision may instead require a paper document to
be used in addition to an electronic document in these circumstances. Third,
consistent with the comments, the provision may require the parties to a transaction
to comply with any legal requirement relating to the provision of information other
than a requirement that the information be provided on paper.
Attribution of electronic documents
Under this bill, an electronic document or electronic signature is attributable
to a person whose act created the document or signature. The act of a person may
be shown in any manner, including through the use of a security procedure that
determines the person to whom an electronic document or electronic signature is
attributable.
Effect of change or error
This bill contains three provisions that determine the effect of a change or error
in an electronic document that occurs in a transmission between the parties to a
transaction. First, if the parties have agreed to use a security procedure to detect
changes or errors and if one of the parties fails to use a security procedure and an
error or change occurs that the nonconforming party would have detected had the
party used the security procedure, the other party may avoid the effect of the changed
or erroneous electronic document. Second, in an automated transaction involving an
individual, the individual may avoid the effect of an electronic document that results
from an error made by the individual in dealing with the automated agent of another
person, if the automated agent did not provide an opportunity for prevention or
correction of the error. However, an individual may avoid the effect of the electronic
document only if the individual, at the time he or she learns of the error, has received
no benefit from the thing of value received from the other party under the transaction
and only if the individual satisfies certain requirements relating to notification of the
other party and return or destruction of the thing of value received. Third, if neither
of these provisions applies to the transaction, the change or error has the effect
provided by other law, including the law of mistake, and by any applicable contract
between the parties.
Electronic notarization and acknowledgement
Like current law under E-sign, this bill permits electronic notarization,
acknowledgement, or verification of a signature or document relating to a
transaction, as long as the electronic signature of the person performing the
notarization, acknowledgement, or verification is accompanied by all other
information required by law.
Retention of electronic documents
Under this bill, any law that requires retention of a document may, with certain
exceptions, be satisfied by retaining an electronic document, as long as the retained
information satisfies certain requirements relating to accuracy and accessibility.
The bill contains similar provisions with regard to laws requiring retention of a
check, although the term "check" is not defined under the bill and, as a result, may
not include a share draft or money order. These provisions are similar to current law
under E-sign. However, unlike E-sign, this bill specifies that an electronic
document that is required to be retained must accurately reflect the information set
forth in the document after it was first generated in its final form as an electronic
document or otherwise. The comments indicate that this provision is intended to
ensure that the content of a document is retained when documents are converted or
reformatted to allow for ongoing electronic retention. However, this provision may
be interpreted to permit a retention requirement to be satisfied by retaining only the
final version of a document that has earlier versions.
The bill provides that an electronic document retained in compliance with these
provisions need not contain any information the sole purpose of which is to enable
the document to be sent, communicated, or received. Under current law, this
ancillary information is normally required to be retained along with the document
to which it is attached. In addition, as under E-sign, an electronic contract or
document retained in compliance with these provisions generally has the same legal
status as an original document. Like E-sign, this bill also provides that a person may
comply with these electronic document retention provisions using the services of
another person.
The bill provides that the state may enact laws, after enactment of this bill, that
prohibit a person from using an electronic document to satisfy any requirement that
the person retain a document for evidentiary, audit, or like purposes. It is unclear,
though, what types of retention requirements are enacted for "evidentiary, audit, or
like purposes." It is also unclear how this provision relates to other provisions of the
bill which provide that an electronic document satisfies any retention requirement
as long as specified requirements relating to accuracy and accessibility are also
satisfied.
In addition, the bill specifies that it does not preclude a governmental unit of
this state from specifying additional requirements for the retention of any document
subject to its jurisdiction. It is unclear how this provision relates to other provisions
of the bill which provide that an electronic document satisfies any retention
requirement as long as specified requirements relating to accuracy and accessibility
are also satisfied. It is also unclear whether this provision grants rule-making
authority or merely references any authority that may exist currently. Also,
although it is unclear from the text whether this provision applies to
nongovernmental documents or only to documents in the possession of a
governmental unit, the official comments imply that the provision is intended to
apply to nongovernmental documents that are subject to a governmental unit's
jurisdiction.
Evidence
Under this bill, a document or signature may not be excluded as evidence solely
because it is in electronic form. This provision confirms the treatment of electronic
documents and signatures under current law.
Automated transactions
This bill validates contracts formed in automated transactions by the
interaction of automated agents of the parties or by the interaction of one party's
automated agent and an individual. Under current law, it is possible to argue that
an automated transaction may not result in an enforceable contract because, at the
time of the transaction, either or both of the parties lack an expression of human
intent to form the contract.
Time and location of electronic sending and receipt
Under this bill, an electronic document is sent when the electronic document
a) is addressed or otherwise properly directed to an information processing system
that the intended recipient has designated or uses for the purpose of receiving
electronic documents or information of the type sent and from which the recipient is
able to retrieve the electronic document; b) is in a form capable of being processed by
that information processing system; and c) enters an information processing system
outside of the control of the sender or enters a region of the information processing
system used or designated by the recipient that is under the recipient's control. An
electronic document is received when the electronic document enters and is in a form
capable of being processed by an information processing system that the recipient
has designated or uses for the purpose of receiving electronic documents or
information of the type sent and from which the recipient is able to retrieve the
electronic document. The bill permits the parties to a transaction to agree to alter
the effect of these provisions with respect to the transaction. Under the bill, an
electronic document may be received even if no individual is aware of its receipt.
Furthermore, under the bill, an electronic acknowledgment of receipt from the
information processing system used or designated by the recipient establishes that
the electronic document was received but does not establish that the information
sent is the same as the information received.
These provisions may be interpreted to alter laws under which the date of
receipt of a public record submitted for filing is the date on which a paper copy is
received or postmarked, so that the date of electronic filing constitutes the date of
receipt instead. However, as noted earlier, this bill specifically states that it applies
only to transactions between parties each of which has agreed to conduct
transactions by electronic means. Although the definition of "transaction" may be
interpreted broadly to include a typical governmental action like the filing of a
document, the prefatory note and comments to UETA imply that a narrower
interpretation is intended which covers only the actions of the government as a
market participant. If the narrower interpretation applies, then these provisions
will likely have no effect upon the filing of most public records.
Under this bill, an electronic document is deemed to be sent from the sender's
place of business that has the closest relationship to the underlying transaction and
to be received at the recipient's place of business that has the closest relationship to
the underlying transaction. If the sender or recipient does not have a place of
business, the electronic document is deemed to be sent or received from the sender's
or recipient's residence. The bill also permits a sender to expressly provide in an
electronic document that the document is deemed to be sent from a different location.
The bill also permits the parties to a transaction to agree to alter the effect of these
provisions on the transaction. To the extent that an electronic document may
constitute a sale, with the seller receiving payment electronically, these provisions
may be interpreted to permit a seller to argue that a sale occurred in a jurisdiction
where the seller is not subject to a tax that would otherwise be imposed under
Wisconsin law. However, the official comments imply that this interpretation is not
intended.
In addition, under the bill, if a person is aware that an electronic document
purportedly sent or purportedly received in compliance with these provisions was not
actually sent or received, the legal effect of the sending or receipt is determined by
other applicable law. Although the official comments are silent on the meaning of
this provision, it is likely intended to give a court direction as to what law to apply
to determine the legal effect when there is a failure to send or receive an electronic
document in the manner provided under the bill.
Transferable records
This bill expands current law with regard to transactions involving the use of
transferable records (electronic versions of certain documents under the Uniform
Commercial Code). Although current law under E-sign only permits the use of
transferrable records in transactions secured by real property, this bill permits the
use of transferable records in any transaction in which a promissory note or
document of title under the Uniform Commercial Code may be used. Under this bill,
an electronic document qualifies as a transferable record only if the issuer of the
electronic document expressly agrees that the electronic document is a transferable
record.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB404, s. 1
1Section
1. 16.61 (7) (d) of the statutes is created to read:
SB404,12,32
16.61
(7) (d) This subsection does not apply to public records governed by s.
3137.20.
SB404, s. 2
1Section
2. 16.611 (2) (e) of the statutes is created to read:
SB404,13,32
16.611
(2) (e) This subsection does not apply to public records governed by s.
3137.20.
SB404, s. 3
4Section
3. 16.612 (2) (c) of the statutes is created to read:
SB404,13,65
16.612
(2) (c) This subsection does not apply to documents or public records
6governed by s. 137.20.
SB404, s. 4
7Section
4. Chapter 137 (title) of the statutes is amended to read:
SB404,13,108
CHAPTER 137
9
authentications
AND ELECTRONIC
10
TRANSACTIONS AND records
SB404, s. 5
11Section
5. Subchapter I (title) of chapter 137 [precedes s. 137.01] of the
12statutes is amended to read:
SB404,13,1313
CHAPTER 137
SB404,13,1714
SUBCHAPTER I
15
NOTARIES AND COMMISSIONERS
16
OF DEEDS
; NONELECTRONIC
17
NOTARIZATION AND ACKNOWLEDGEMENT
SB404, s. 6
18Section
6. 137.01 (3) (a) of the statutes is amended to read:
SB404,13,2419
137.01
(3) (a)
Every Except as authorized in s. 137.19, every notary public shall
20provide an engraved official seal which makes a distinct and legible impression or
21official rubber stamp which makes a distinct and legible imprint on paper. The
22impression of the seal or the imprint of the rubber stamp shall state only the
23following: "Notary Public," "State of Wisconsin" and the name of the notary. But any
24notarial seal in use on August 1, 1959, shall be considered in compliance.
SB404, s. 7
25Section
7. 137.01 (4) (a) of the statutes is amended to read: