[Stats. 1999, Chapter 428
(SB 820, Sher and Bowen, with co-authors Assembly Members Alquist and Wayne)]

Adds Title 2.5 (commencing with Section 1633.1) to Part 2 of Division 3 of Civil Code and amends Section 18608 of Financial Code

Millions of commercial transactions now take place over the Internet, but there remains uncertainty regarding the legal validity of electronically created contracts and the acceptability of electronic records and documents as evidence of a transaction. This legislation enacts the Uniform Electronic Transactions Act to facilitate electronic transactions where the parties agree in advance to conduct a transaction electronically. The fundamental policy running through the Act is the establishment of the legal equivalence of electronic records and signatures with paper writings and manually signed signatures. The Act does not require any record or signature to be processed electronically, and does not apply to wills and trusts and certain other transactions.

In order to be valid, an agreement to conduct a transaction electronically must itself be contained in an electronic record, or if part of a standard agreement on paper, the clause authorizing the electronic transaction must be separate and optional. In other words, it cannot be hidden away in boilerplate which the party is required to sign. An agreement cannot be conditioned upon consent to transact electronically.

The Act provides that if a law requires a record to be in writing, an electronic record will satisfy the law. Similarly, if a law requires a signature, an electronic signature satisfies the law. An electronic signature is defined as an "electronic sound, symbol or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record." The Act also contains provisions for electronic notarization of electronic signatures, electronic signatures under penalty of perjury, and retention of records (including checks) in electronic format. The Act contains rules that apply if a change or error in an electronic record occurs in the transmission.