"E-Signature Act" Electronic Signatures in Global and National Commerce Act.

The Electronic Signatures in Global and National Commerce Act ("E-Signature Act") became effective on October 1, 2000, and will drastically change the way companies (as well as consumers) enter into legal transactions. Under this law, online "electronic" signatures on legal agreements or commercial transactions have the same legal status as a written signature, thereby altering the requirement under the Statute of Frauds and Uniform Commercial Code Article 2, which states that all transactions for goods over $500 must be in writing. The law states that "a signature, contract or other record relating to [transactions in interstate commerce] may not be denied legal effect, validity or enforcement solely because it is in electronic form." The law also provides that records of electronic commerce (such as contracts, mortgages and financial securities) may be stored electronically, rather than in paper form, effective March 1, 2001.

An electronic signature is a string of code that uniquely identifies a customer, whose signature can be verified by various methods. These include downloading or installing signature software on a computer through which personal information (such as a social security number) is entered; utilizing a "smart card" which can store digital information about the signer; using digital verification services; scanning handwritten signatures; and even through the use of biometrics, which are fingerprint or optical scans.

E-signatures will benefit businesses by encouraging credit and commercial transactions over the Internet, reducing the transaction time and cost of commercial transactions, and eliminating certain paperwork. The disadvantages include fraud and safety issues, privacy issues, and the time it will take businesses to adapt to new technology and methods of doing business. Theoretically, the cost of commercial transactions will be reduced once businesses embrace the use of e-signatures.

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