By Carona S.B. No. 393 77R5010 LJR-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the Uniform Electronic Transactions Act. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Title 4, Business & Commerce Code, is amended by 1-5 adding Chapter 43 to read as follows: 1-6 CHAPTER 43. UNIFORM ELECTRONIC TRANSACTIONS ACT 1-7 Sec. 43.001. SHORT TITLE. This chapter may be cited as the 1-8 Uniform Electronic Transactions Act. 1-9 Sec. 43.002. DEFINITIONS. In this chapter: 1-10 (1) "Agreement" means the bargain of the parties in 1-11 fact, as found in their language or inferred from other 1-12 circumstances and from rules, regulations, and procedures given the 1-13 effect of agreements under laws otherwise applicable to a 1-14 particular transaction. 1-15 (2) "Automated transaction" means a transaction 1-16 conducted or performed, in whole or in part, by electronic means or 1-17 electronic records, in which the acts or records of one or both 1-18 parties are not reviewed by an individual in the ordinary course in 1-19 forming a contract, performing under an existing contract, or 1-20 fulfilling an obligation required by the transaction. 1-21 (3) "Computer program" means a set of statements or 1-22 instructions to be used directly or indirectly in an information 1-23 processing system in order to bring about a certain result. 1-24 (4) "Contract" means the total legal obligation 2-1 resulting from the parties' agreement as affected by this chapter 2-2 and other applicable law. 2-3 (5) "Electronic" means relating to technology having 2-4 electrical, digital, magnetic, wireless, optical, electromagnetic, 2-5 or similar capabilities. 2-6 (6) "Electronic agent" means a computer program or an 2-7 electronic or other automated means used independently to initiate 2-8 an action or respond to electronic records or performances in whole 2-9 or in part, without review or action by an individual. 2-10 (7) "Electronic record" means a record created, 2-11 generated, sent, communicated, received, or stored by electronic 2-12 means. 2-13 (8) "Electronic signature" means an electronic sound, 2-14 symbol, or process attached to or logically associated with a 2-15 record and executed or adopted by a person with the intent to sign 2-16 the record. 2-17 (9) "Governmental agency" means an executive, 2-18 legislative, or judicial agency, department, board, commission, 2-19 authority, institution, or instrumentality of the federal 2-20 government or of a state or of a county, municipality, or other 2-21 political subdivision of a state. 2-22 (10) "Information" means data, text, images, sounds, 2-23 codes, computer programs, software, databases, or the like. 2-24 (11) "Information processing system" means an 2-25 electronic system for creating, generating, sending, receiving, 2-26 storing, displaying, or processing information. 2-27 (12) "Record" means information that is inscribed on a 3-1 tangible medium or that is stored in an electronic or other medium 3-2 and is retrievable in perceivable form. 3-3 (13) "Security procedure" means a procedure employed 3-4 for the purpose of verifying that an electronic signature, record, 3-5 or performance is that of a specific person or for detecting 3-6 changes or errors in the information in an electronic record. The 3-7 term includes a procedure that requires the use of algorithms or 3-8 other codes, identifying words or numbers, encryption, or callback 3-9 or other acknowledgment procedures. 3-10 (14) "State" means a state of the United States, the 3-11 District of Columbia, Puerto Rico, the United States Virgin 3-12 Islands, or any territory or insular possession subject to the 3-13 jurisdiction of the United States. The term includes an Indian 3-14 tribe or band, or Alaskan native village, which is recognized by 3-15 federal law or formally acknowledged by a state. 3-16 (15) "Transaction" means an action or set of actions 3-17 occurring between two or more persons relating to the conduct of 3-18 business, commercial, or governmental affairs. 3-19 Sec. 43.003. SCOPE. (a) Except as otherwise provided in 3-20 Subsection (b), this chapter applies to electronic records and 3-21 electronic signatures relating to a transaction. 3-22 (b) This chapter does not apply to a transaction to the 3-23 extent it is governed by: 3-24 (1) a law governing the creation and execution of 3-25 wills, codicils, or testamentary trusts; or 3-26 (2) the Uniform Commercial Code, other than Sections 3-27 1.107 and 1.206, and Chapters 2 and 2A. 4-1 (c) This chapter applies to an electronic record or 4-2 electronic signature otherwise excluded from the application of 4-3 this chapter under Subsection (b) when used for a transaction 4-4 subject to a law other than those specified in Subsection (b). 4-5 (d) A transaction subject to this chapter is also subject to 4-6 other applicable substantive law. 4-7 Sec. 43.004. PROSPECTIVE APPLICATION. This chapter applies 4-8 to any electronic record or electronic signature created, 4-9 generated, sent, communicated, received, or stored on or after 4-10 January 1, 2002. 4-11 Sec. 43.005. USE OF ELECTRONIC RECORDS AND ELECTRONIC 4-12 SIGNATURES; VARIATION BY AGREEMENT. (a) This chapter does not 4-13 require a record or signature to be created, generated, sent, 4-14 communicated, received, stored, or otherwise processed or used by 4-15 electronic means or in electronic form. 4-16 (b) This chapter applies only to transactions between 4-17 parties each of which has agreed to conduct transactions by 4-18 electronic means. Whether the parties agree to conduct a 4-19 transaction by electronic means is determined from the context and 4-20 surrounding circumstances, including the parties' conduct. 4-21 (c) A party that agrees to conduct a transaction by 4-22 electronic means may refuse to conduct other transactions by 4-23 electronic means. The right granted by this subsection may not be 4-24 waived by agreement. 4-25 (d) Except as otherwise provided in this chapter, the effect 4-26 of any of its provisions may be varied by agreement. The presence 4-27 in certain provisions of this chapter of the words "unless 5-1 otherwise agreed," or words of similar import, does not imply that 5-2 the effect of other provisions may not be varied by agreement. 5-3 (e) Whether an electronic record or electronic signature has 5-4 legal consequences is determined by this chapter and other 5-5 applicable law. 5-6 Sec. 43.006. CONSTRUCTION AND APPLICATION. This chapter 5-7 must be construed and applied: 5-8 (1) to facilitate electronic transactions consistent 5-9 with other applicable law; 5-10 (2) to be consistent with reasonable practices 5-11 concerning electronic transactions and with the continued expansion 5-12 of those practices; and 5-13 (3) to effectuate its general purpose to make uniform 5-14 the law with respect to the subject of this chapter among states 5-15 enacting it. 5-16 Sec. 43.007. LEGAL RECOGNITION OF ELECTRONIC RECORDS, 5-17 ELECTRONIC SIGNATURES, AND ELECTRONIC CONTRACTS. (a) A record or 5-18 signature may not be denied legal effect or enforceability solely 5-19 because it is in electronic form. 5-20 (b) A contract may not be denied legal effect or 5-21 enforceability solely because an electronic record was used in its 5-22 formation. 5-23 (c) If a law requires a record to be in writing, an 5-24 electronic record satisfies the law. 5-25 (d) If a law requires a signature, an electronic signature 5-26 satisfies the law. 5-27 Sec. 43.008. PROVISION OF INFORMATION IN WRITING; 6-1 PRESENTATION OF RECORDS. (a) If parties have agreed to conduct a 6-2 transaction by electronic means and a law requires a person to 6-3 provide, send, or deliver information in writing to another person, 6-4 the requirement is satisfied if the information is provided, sent, 6-5 or delivered, as the case may be, in an electronic record capable 6-6 of retention by the recipient at the time of receipt. An 6-7 electronic record is not capable of retention by the recipient if 6-8 the sender or its information processing system inhibits the 6-9 ability of the recipient to print or store the electronic record. 6-10 (b) If a law other than this chapter requires a record (i) 6-11 to be posted or displayed in a certain manner, (ii) to be sent, 6-12 communicated, or transmitted by a specified method, or (iii) to 6-13 contain information that is formatted in a certain manner, the 6-14 following rules apply: 6-15 (1) the record must be posted or displayed in the 6-16 manner specified in the other law; 6-17 (2) except as otherwise provided in Subsection (d)(2), 6-18 the record must be sent, communicated, or transmitted by the method 6-19 specified in the other law; and 6-20 (3) the record must contain the information formatted 6-21 in the manner specified in the other law. 6-22 (c) If a sender inhibits the ability of a recipient to store 6-23 or print an electronic record, the electronic record is not 6-24 enforceable against the recipient. 6-25 (d) The requirements of this section may not be varied by 6-26 agreement, but: 6-27 (1) to the extent a law other than this chapter 7-1 requires information to be provided, sent, or delivered in writing 7-2 but permits that requirement to be varied by agreement, the 7-3 requirement under Subsection (a) that the information be in the 7-4 form of an electronic record capable of retention may also be 7-5 varied by agreement; and 7-6 (2) a requirement under a law other than this chapter 7-7 to send, communicate, or transmit a record by first-class mail, may 7-8 be varied by agreement to the extent permitted by the other law. 7-9 Sec. 43.009. ATTRIBUTION AND EFFECT OF ELECTRONIC RECORD AND 7-10 ELECTRONIC SIGNATURE. (a) An electronic record or electronic 7-11 signature is attributable to a person if it was the act of the 7-12 person. The act of the person may be shown in any manner, 7-13 including a showing of the efficacy of any security procedure 7-14 applied to determine the person to which the electronic record or 7-15 electronic signature was attributable. 7-16 (b) The effect of an electronic record or electronic 7-17 signature attributed to a person under Subsection (a) is determined 7-18 from the context and surrounding circumstances at the time of its 7-19 creation, execution, or adoption, including the parties' agreement, 7-20 if any, and otherwise as provided by law. 7-21 Sec. 43.010. EFFECT OF CHANGE OR ERROR. (a) If a change or 7-22 error in an electronic record occurs in a transmission between 7-23 parties to a transaction, the rules provided by this section apply. 7-24 (b) If the parties have agreed to use a security procedure 7-25 to detect changes or errors and one party has conformed to the 7-26 procedure, but the other party has not, and the nonconforming party 7-27 would have detected the change or error had that party also 8-1 conformed, the conforming party may avoid the effect of the changed 8-2 or erroneous electronic record. 8-3 (c) In an automated transaction involving an individual, the 8-4 individual may avoid the effect of an electronic record that 8-5 resulted from an error made by the individual in dealing with the 8-6 electronic agent of another person if the electronic agent did not 8-7 provide an opportunity for the prevention or correction of the 8-8 error and, at the time the individual learns of the error, the 8-9 individual: 8-10 (1) promptly notifies the other person of the error 8-11 and that the individual did not intend to be bound by the 8-12 electronic record received by the other person; 8-13 (2) takes reasonable steps, including steps that 8-14 conform to the other person's reasonable instructions, to return to 8-15 the other person or, if instructed by the other person, to destroy 8-16 the consideration received, if any, as a result of the erroneous 8-17 electronic record; and 8-18 (3) has not used or received any benefit or value from 8-19 the consideration, if any, received from the other person. 8-20 (d) If neither Subsection (b) nor Subsection (c) applies, 8-21 the change or error has the effect provided by other law, including 8-22 the law of mistake, and the parties' contract, if any. 8-23 (e) Subsections (c) and (d) may not be varied by agreement. 8-24 Sec. 43.011. NOTARIZATION AND ACKNOWLEDGMENT. If a law 8-25 requires a signature or record to be notarized, acknowledged, 8-26 verified, or made under oath, the requirement is satisfied if the 8-27 electronic signature of the person authorized to perform those 9-1 acts, together with all other information required to be included 9-2 by other applicable law, is attached to or logically associated 9-3 with the signature or record. 9-4 Sec. 43.012. RETENTION OF ELECTRONIC RECORDS; ORIGINALS. (a) 9-5 If a law requires that a record be retained, the requirement is 9-6 satisfied by retaining an electronic record of the information in 9-7 the record which: 9-8 (1) accurately reflects the information set forth in 9-9 the record after it was first generated in its final form as an 9-10 electronic record or otherwise; and 9-11 (2) remains accessible for later reference. 9-12 (b) A requirement to retain a record in accordance with 9-13 Subsection (a) does not apply to any information the sole purpose 9-14 of which is to enable the record to be sent, communicated, or 9-15 received. 9-16 (c) A person may satisfy Subsection (a) by using the 9-17 services of another person if the requirements of that subsection 9-18 are satisfied. 9-19 (d) If a law requires a record to be presented or retained 9-20 in its original form, or provides consequences if the record is not 9-21 presented or retained in its original form, that law is satisfied 9-22 by an electronic record retained in accordance with Subsection (a). 9-23 (e) If a law requires retention of a check, that requirement 9-24 is satisfied by retention of an electronic record of the 9-25 information on the front and back of the check in accordance with 9-26 Subsection (a). 9-27 (f) A record retained as an electronic record in accordance 10-1 with Subsection (a) satisfies a law requiring a person to retain a 10-2 record for evidentiary, audit, or like purposes, unless a law 10-3 enacted after January 1, 2002, specifically prohibits the use of an 10-4 electronic record for the specified purpose. 10-5 (g) This section does not preclude a governmental agency of 10-6 this state from specifying additional requirements for the 10-7 retention of a record subject to the agency's jurisdiction. 10-8 Sec. 43.013. ADMISSIBILITY IN EVIDENCE. In a proceeding, 10-9 evidence of a record or signature may not be excluded solely 10-10 because it is in electronic form. 10-11 Sec. 43.014. AUTOMATED TRANSACTION. (a) In an automated 10-12 transaction, the rules provided by this section apply. 10-13 (b) A contract may be formed by the interaction of 10-14 electronic agents of the parties, even if no individual was aware 10-15 of or reviewed the electronic agents' actions or the resulting 10-16 terms and agreements. 10-17 (c) A contract may be formed by the interaction of an 10-18 electronic agent and an individual, acting on the individual's own 10-19 behalf or for another person, including by an interaction in which 10-20 the individual performs actions that the individual is free to 10-21 refuse to perform and which the individual knows or has reason to 10-22 know will cause the electronic agent to complete the transaction or 10-23 performance. 10-24 (d) The terms of the contract are determined by the 10-25 substantive law applicable to it. 10-26 Sec. 43.015. TIME AND PLACE OF SENDING AND RECEIPT. (a) 10-27 Unless otherwise agreed between the sender and the recipient, an 11-1 electronic record is sent when it: 11-2 (1) is addressed properly or otherwise directed 11-3 properly to an information processing system that the recipient has 11-4 designated or uses for the purpose of receiving electronic records 11-5 or information of the type sent and from which the recipient is 11-6 able to retrieve the electronic record; 11-7 (2) is in a form capable of being processed by that 11-8 system; and 11-9 (3) enters an information processing system outside 11-10 the control of the sender or of a person that sent the electronic 11-11 record on behalf of the sender or enters a region of the 11-12 information processing system designated or used by the recipient 11-13 which is under the control of the recipient. 11-14 (b) Unless otherwise agreed between the sender and the 11-15 recipient, an electronic record is received when: 11-16 (1) it enters an information processing system that 11-17 the recipient has designated or uses for the purpose of receiving 11-18 electronic records or information of the type sent and from which 11-19 the recipient is able to retrieve the electronic record; and 11-20 (2) it is in a form capable of being processed by that 11-21 system. 11-22 (c) Subsection (b) applies even if the place the information 11-23 processing system is located is different from the place the 11-24 electronic record is deemed to be received under Subsection (d). 11-25 (d) Unless otherwise expressly provided in the electronic 11-26 record or agreed between the sender and the recipient, an 11-27 electronic record is deemed to be sent from the sender's place of 12-1 business and to be received at the recipient's place of business. 12-2 For purposes of this subsection, the following rules apply: 12-3 (1) if the sender or the recipient has more than one 12-4 place of business, the place of business of that person is the 12-5 place having the closest relationship to the underlying 12-6 transaction; and 12-7 (2) if the sender or the recipient does not have a 12-8 place of business, the place of business is the sender's or the 12-9 recipient's residence, as the case may be. 12-10 (e) An electronic record is received under Subsection (b) 12-11 even if no individual is aware of its receipt. 12-12 (f) Receipt of an electronic acknowledgment from an 12-13 information processing system described in Subsection (b) 12-14 establishes that a record was received but, by itself, does not 12-15 establish that the content sent corresponds to the content 12-16 received. 12-17 (g) If a person is aware that an electronic record 12-18 purportedly sent under Subsection (a), or purportedly received 12-19 under Subsection (b), was not actually sent or received, the legal 12-20 effect of the sending or receipt is determined by other applicable 12-21 law. Except to the extent permitted by the other law, the 12-22 requirements of this subsection may not be varied by agreement. 12-23 Sec. 43.016. TRANSFERABLE RECORDS. (a) In this section, 12-24 "transferable record" means an electronic record that: 12-25 (1) would be a note under Chapter 3, or a document 12-26 under Chapter 7, if the electronic record were in writing; and 12-27 (2) the issuer of the electronic record expressly has 13-1 agreed is a transferable record. 13-2 (b) A person has control of a transferable record if a 13-3 system employed for evidencing the transfer of interests in the 13-4 transferable record reliably establishes that person as the person 13-5 to which the transferable record was issued or transferred. 13-6 (c) A system satisfies Subsection (b), and a person is 13-7 deemed to have control of a transferable record, if the 13-8 transferable record is created, stored, and assigned in such a 13-9 manner that: 13-10 (1) a single authoritative copy of the transferable 13-11 record exists which is unique, identifiable, and, except as 13-12 otherwise provided in Subdivisions (4), (5), and (6), unalterable; 13-13 (2) the authoritative copy identifies the person 13-14 asserting control as: 13-15 (A) the person to which the transferable record 13-16 was issued; or 13-17 (B) if the authoritative copy indicates that the 13-18 transferable record has been transferred, the person to which the 13-19 transferable record was most recently transferred; 13-20 (3) the authoritative copy is communicated to and 13-21 maintained by the person asserting control or its designated 13-22 custodian; 13-23 (4) copies or revisions that add or change an 13-24 identified assignee of the authoritative copy can be made only with 13-25 the consent of the person asserting control; 13-26 (5) each copy of the authoritative copy and any copy 13-27 of a copy is readily identifiable as a copy that is not the 14-1 authoritative copy; and 14-2 (6) any revision of the authoritative copy is readily 14-3 identifiable as authorized or unauthorized. 14-4 (d) Except as otherwise agreed, a person having control of a 14-5 transferable record is the holder, as defined in Section 1.201, of 14-6 the transferable record and has the same rights and defenses as a 14-7 holder of an equivalent record or writing under the Uniform 14-8 Commercial Code, including, if the applicable statutory 14-9 requirements under Section 3.302(a), 7.501, or 9.308 are satisfied, 14-10 the rights and defenses of a holder in due course, a holder to 14-11 which a negotiable document of title has been duly negotiated, or a 14-12 purchaser, respectively. Delivery, possession, and indorsement are 14-13 not required to obtain or exercise any of the rights under this 14-14 subsection. 14-15 (e) Except as otherwise agreed, an obligor under a 14-16 transferable record has the same rights and defenses as an 14-17 equivalent obligor under equivalent records or writings under the 14-18 Uniform Commercial Code. 14-19 (f) If requested by a person against which enforcement is 14-20 sought, the person seeking to enforce the transferable record shall 14-21 provide reasonable proof that the person is in control of the 14-22 transferable record. Proof may include access to the authoritative 14-23 copy of the transferable record and related business records 14-24 sufficient to review the terms of the transferable record and to 14-25 establish the identity of the person having control of the 14-26 transferable record. 14-27 Sec. 43.017. ACCEPTANCE AND DISTRIBUTION OF ELECTRONIC 15-1 RECORDS BY GOVERNMENTAL AGENCIES. (a) Except as otherwise provided 15-2 by Section 43.012(f), each state agency shall determine whether, 15-3 and the extent to which, the agency will send and accept electronic 15-4 records and electronic signatures to and from other persons and 15-5 otherwise create, generate, communicate, store, process, use, and 15-6 rely upon electronic records and electronic signatures. 15-7 (b) To the extent that a state agency uses electronic 15-8 records and electronic signatures under Subsection (a), the 15-9 Department of Information Resources, giving due consideration to 15-10 security, may specify: 15-11 (1) the manner and format in which the electronic 15-12 records must be created, generated, sent, communicated, received, 15-13 and stored and the systems established for those purposes; 15-14 (2) if electronic records must be signed by electronic 15-15 means, the type of electronic signature required, the manner and 15-16 format in which the electronic signature must be affixed to the 15-17 electronic record, and the identity of, or criteria that must be 15-18 met by, any third party used by a person filing a document to 15-19 facilitate the process; 15-20 (3) control processes and procedures as appropriate to 15-21 ensure adequate preservation, disposition, integrity, security, 15-22 confidentiality, and auditability of electronic records; and 15-23 (4) any other required attributes for electronic 15-24 records which are specified for corresponding nonelectronic records 15-25 or reasonably necessary under the circumstances. 15-26 (c) Except as otherwise provided in Section 43.012(f), this 15-27 chapter does not require a governmental agency of this state to use 16-1 or permit the use of electronic records or electronic signatures. 16-2 Sec. 43.018. INTEROPERABILITY. The Department of Information 16-3 Resources may encourage and promote consistency and 16-4 interoperability with similar requirements adopted by other 16-5 governmental agencies of this and other states and the federal 16-6 government and nongovernmental persons interacting with 16-7 governmental agencies of this state. If appropriate, those 16-8 standards may specify differing levels of standards from which 16-9 governmental agencies of this state may choose in implementing the 16-10 most appropriate standard for a particular application. 16-11 Sec. 43.019. EXEMPTION TO PREEMPTION BY FEDERAL ELECTRONIC 16-12 SIGNATURES ACT. This chapter modifies, limits, or supersedes the 16-13 provisions of the Electronic Signatures in Global and National 16-14 Commerce Act (15 U.S.C. Section 7001 et seq.) as authorized by 16-15 Section 102 of that Act (15 U.S.C. Section 7002). 16-16 SECTION 2. This Act takes effect January 1, 2002.