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Summary of Digital Legislation Affecting Colorado

A Guide to UETA, Electronic Signatures and UCITA

The Federal government enacted a digital signature law earlier this year. The law and proposed state laws related to digital signatures and e-commerce will alter how contracts are formed and interpreted. Many businesses in Colorado are including references to these beneficial concepts in their contracts now.

1. E-Sign. The Electronic Signatures in Global and National Commerce Acts (E-Sign) is a federal digital signature law that goes into effect October 1, 2000. Like UETA, E-Sign recognizes the validity of signatures, contracts, or other records in electronic form. E-Sign specifically does not preempt UETA. However, it does preempt other "inconsistent" state laws. A primary motivation underlying the development of E-Sign was concern that state digital legislation was becoming a barrier to electronic commerce because of differing state requirements. Since UETA is more comprehensive than E-Sign, states may enact UETA. Colorado's Governor Bill Owens supports enacting UETA.

2. UETA. The Uniform Electronic Transactions Act (UETA) is a proposed state law that recognizes the validity of digital records and digital signatures relating to a transaction. Specifically, UETA provides that a record, signature or contract may not be denied legal effect or enforceability solely because it is in electronic form or because an electronic record was used in its formation. In addition, if a law requires a signature or a record to be in writing, an electronic signature or an electronic record satisfies the law. In many cases, UETA is more comprehensive than state digital signature laws. UETA has been adopted in 18 states (not Colorado) and introduced in 11 more. Colorado's Governor Bill Owens supports enacting UETA.

For more information: www.uetaonline.com

3. State Digital Signature Laws. 46 states have adopted laws which recognize the validity of digital signatures. All or portions of state statutes have been pre-empted by E-Sign. Colorado has two digital signature laws: one for the private sector and another for government. Because of federal preemption concerns, states with existing digital signature laws may enact UETA.

How would the combined adoption of UETA and E-Sign and state digital signature laws affect business in Colorado?

These laws, when enacted, will put electronic signatures and documents on the same level as written signature and documents in both the private and public sectors.

The Uniform Computer Information Transaction Act (UCITA) is a proposed state law that applies to contracts to create, modify, transfer or license computer information. Computer information, in today's technology, is digital information. UCITA is a provision similar to the Uniform Commercial Code ("UCC")– but for computer information rather than "goods." UCITA has been adopted in Virginia and Maryland and proposed in 12 other states, including Colorado.

How would UCITA affect business?:

In transactions relating to computer information, there are no standard "rules of the road" that describe how contracts may be formed, what warranties and what remedies automatically apply. The courts currently use general rules currently used in the sale of goods. UCITA would establish rules and give predictability to the resolution of issues related to computer information.

UCITA would apply to:

  • Contracts to create computer programs
  • Contracts for computer games
  • Contracts for multimedia products
  • Contracts for online access to databases
  • Contracts to distribute information on the Internet

UCITA would not apply to:

  • Software imbedded in goods other than a computer or a computer peripheral
  • Goods (television sets, stereos, automobiles, toasters, baseball bats or traditional books and movies)

Should states adopt UCITA?:

UCITA makes it possible for states to provide a neutral and predictable legal framework for transactions relating to computer information, the Internet, and e-commerce. UCITA puts computer information industries on a par with the sellers of goods by establishing the legal rules applicable to contracts for the licensing and sale of their products.

Why are there objections to UCITA?:

There are two general areas of concern. First, UCITA arguably places consumers in an "inferior" position with respect to software manufacturers. Second, commentors have indicated that UCITA is unnecessary since existing laws can supposedly be amended to include areas UCITA addresses.

For more information: www.ucitaonline.com (Favors UCITA)
www.cpsr.org/program/ucita/braucher.html (Against UCITA)

Copyright © 2008 Fairfield and Woods, P.C., ALL RIGHTS RESERVEDNational Law Review, Volume , Number 188



About this Author

John A. Leonard specializes in the legal aspects of financing, running and selling businesses. John works with companies that are financed and grown from operations, as well as those that are angel, venture capital or financed by other outside investors using private placement memorandums. John helps clients grow from operations and by mergers and acquisitions. He helps clients structure C-level retention and bonus programs. John advises companies on business exits to a company’s management or through private equity acquisitions and by mergers. John assists many of his clients in software...