Introduction
In its most basic sense, an agreement is a commitment between two or more parties to perform obligations in exchange for consideration. The agreement cannot be subject to imperfect memory, competing claims or repudiation. There must be a state of awareness that an agreement was being entered into and that a state of informed consent existed during the act of signing. There must be sufficient proof to establish the identities involved, the specifics of the agreement and the time the agreement was entered into; all of which must be retained for a prescribed period.
The transformation from a paper-based agreement process to an electronic equivalent makes no difference to the ongoing need to adhere to legal standards, meet legislative requirements and comply with regulatory requirements. However, the electronic paradigm will create many new legal and technical challenges and present risks that will radically change the methods of meeting the standards and requirements and demonstrating their adherence and compliance.
This paper will discuss a set of five principles that are essential to the legal admissibility of an electronic agreement. These principles are prerequisites to enforceable electronic agreements as required by existing legal standards and electronic signature legislation. Admissibility can be understood to mean meeting the prerequisite requirements necessary to hold an individual accountable, to obtain a successful dispute resolution judgment or to obtain a favorable court adjudication. This paper will also specify sixteen measurement criteria that can be used as metrics to assess whether the architecture of an electronic transaction will meet the requirements of admissibility. But first, let us define the essential components of an electronic signature and discuss the legal significance of electronic signature legislation — the elimination of a key barrier to executing end-to-end electronic agreements.
Components of an Electronic Signature
In order to understand the impact of electronic signature legislation and to identity the minimum requirements necessary to adhere to the act, one must first understand the legal definition of an electronic signature and identify its essential components. The most effective way to do this is to understand the fundamentals of electronic signature laws, as articulated by the United Nations Commission on International Trade Law (UNCITRAL) Model Law 1 on Electronic Signatures (“UN Model Law”). Then to understand the intent of a multinational standard such as the European Union Electronic Signature Directive (“EU Directive”) 2 and finally to consider the specifics of a national act — the United States Electronic Signatures in Global and National Commerce Act 3 (“eSign Act”). From these reference sources, a common set of requirements will become apparent.
The definition of an electronic signature as provided by the UN Model Law 4 is:
An electronic signature is “data in electronic form in, affixed to, or logically associated with, a data message, which may be used to identify the signatory in relation to the data message and indicate the signatory’s approval of the information contained in the data message.”
The definition as provided by the EU Directive 5 is:
“electronic signature means data in electronic form which are attached to or logically associated with other electronic data and which serve as a method of authentication…”
Finally, the definition as provided by the US e-Sign Act 6 is:
“The term electronic signature means an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
All three definitions require the signature to be affixed to or associated with what is being signed. Therefore an electronic signature cannot exist without a context and the specifics of what is being signed. Furthermore, the UN Model Law and the e-Sign Act definitions add that the act of signing must be an act of approval or intent, respectively and the EU Directive defines the intent as a method of authentication. Therefore an electronic signature cannot further exist without the existence of intent. Consequently, in the most general sense these definitions describe more the formation of an electronic agreement — a signature in electronic form linked to a record in electronic form with the act of signing performing a purpose, either approval, authentication or intent.
