The US House of Representatives has overwhelmingly approved a bill that is expected to stimulate electronic commerce by putting legal force behind contracts, purchase orders and other documents that are completed online.
Declaring the dawn of the "digital John Hancock" era, the House voted 426 to 4 on Wednesday in favour of the Electronic Signatures in Global and National Commerce Act (E-SIGN). The Senate is expected to take up the Bill later this week, and US President Bill Clinton has said he will sign it.
Before the vote, several House members spoke in favour of the Bill, saying it will remove an impediment to the acceptance of electronic commerce by setting up a legal framework that recognises electronically created signatures on a range of documents that currently require a signature on paper. The Bill is also expected to ease the transition at large corporations of paper-driven systems that control inventory, production and supply to an online environment.
"We are simply giving the electronic medium the same legal effect and enforceability as the medium of paper," said Representative Tom Bliley. "This [legislation] will allow consumers to engage in a whole host of activities on the Internet that are not possible today." Although consumers currently can use the Internet for various types of business transactions such as applying for a mortgage, opening an online brokerage account or getting a quote on a life insurance policy, they can only close the deal by putting pen to paper.
"E-SIGN will allow the entire transaction to be done electronically, and the transaction will have the same legal effect and enforceability as a paper contract," Bliley said.
Under the Bill, no one could be forced to accept a paperless transaction taking place entirely online. The Bill provides for an "opt-in" system with a "pretty extensive consent agreement," said Representative Billy Tauzin.
Consumers who agree to carrying out a transaction online would have to affirm their intentions electronically, and a business would have to take reasonable steps to make sure consumers will be able to open a digital document on their computer. In addition, if the business replaces its software, it must notify the consumer and give him or her an option to end the arrangement.