HBA-MPM, JLV H.B. 1201 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1201 By: Brimer Business & Industry 3/14/2001 Introduced BACKGROUND AND PURPOSE Current state law does not contain any provisions governing the use of electronic signatures, contracts, and records. Therefore, parties enter into electronic contracts or send electronic records at their own risk. The Electronic Signatures in Global and National Commerce Act, passed by the 106th Congress in 2000, provided that in any transaction affecting interstate commerce an electronic signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form. The federal legislation also authorized states to enact or adopt the Uniform Electronic Transactions Act, as approved and recommended for enactment in all states by the National Conference of Commissioners on Uniform State Laws in 1999. Several states have passed such an act. House Bill 1201 creates the Uniform Electronic Transactions Act to regulate the use of transactions involving electronic records, signatures, and contracts. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 1201 amends the Business & Commerce Code to create the Uniform Electronic Transactions Act to regulate the use of transactions involving electronic records and electronic signatures (Secs. 43.001 and 43.003). The bill provides for the legal recognition and enforceability of electronic records, electronic signatures, and contracts utilizing electronic records. The bill provides that if a law requires a signature of for a record to be in writing, an electronic signature or record satisfies the law (Sec. 43.007). The bill does not apply to a transaction governed by other laws concerning the creation and execution of wills, codicils, or testamentary trusts, or certain sections of the Uniform Commercial Code (Sec. 43.003). The bill applies only to transactions between parties that agree to conduct transactions by electronic means (Sec. 43.005). The bill provides that if two parties have agreed to conduct a transaction by electronic means and the law requires one party to send information in writing, the requirement is satisfied if the information is provided, sent, or delivered in an electronic record capable of retention by the recipient. The bill provides that an electronic record is not enforceable against the recipient if a sender inhibits the ability of the recipient to store or print an electronic record (Sec. 43.008). H.B. 1201 provides that an electronic record or electronic signature is attributable to a person if it was the act of the person (Sec. 43.009). The bill provides remedies for situations in which errors or changes occur in an electronic record between parties in an electronic transaction who have agreed on security procedures and between an individual and an electronic agent of another person involved in an automated transaction (Sec. 43.010). The bill provides that the requirement of a law requiring a signature or record to be notarized, acknowledged, verified, or made under oath is satisfied if the electronic signature of the person authorized to perform those acts is attached to or logically associated with the signature or record (Sec. 43.011). If a law requires a record to be retained, the requirement is satisfied by retaining an electronic record of the information in the record that is accurate and accessible for later reference. If a law requires the retention of a check, that requirement is satisfied by the retention of an electronic record of the pertinent information contained on the check (Sec. 43.012). The bill provides that, in a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form (Sec. 43.013). The bill provides the terms of a contract between electronic agents for electronic automated transactions, the terms under which an electronic record is considered as being sent and received, and the terms under which an electronic record is considered a transferable record and provisions regarding the control of a transferable record (Secs. 43.014, 43.015, and 43.016). The bill requires each state agency to determine whether, and the extent to which, the agency will send and accept electronic records and electronic signatures to and from other persons. The bill authorizes the Department of Information Resources to specify the manner and format in which the electronic records must be created, generated, sent, communicated, received, and stored, and the systems established for those purposes. The bill does not require a governmental agency of this state to use or permit the use of electronic records or electronic signatures (Sec. 43.017). The bill authorizes the Department of Information Resources to encourage and promote consistency and interoperability within governmental agencies of this state, other states, the federal government, and nongovernmental persons who interact with state governmental agencies (Sec. 43.018). The bill modifies, limits, or supersedes the provisions of the Electronic Signatures in Global and National Commerce Act as authorized by that Act and applies to any electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after January 1, 2002 (Secs. 43.019 and 43.004). EFFECTIVE DATE January 1, 2002.