Washington's Electronic Signature Act: an Anachronism in the New Millennium

• Publication year: 2021

WASHINGTON'S ELECTRONIC SIGNATURE ACT: AN ANACHRONISM IN THE NEW MILLENNIUM

Stephanie Curry

Abstract: Today, electronic contracting is at the forefront of how consumers, governments, and businesses conduct their affairs. Over the last several decades, electronic contracting has taken on new forms that have raised doubts about contract formation and enforceability. In order to facilitate commerce, the federal government and forty-nine states have responded by passing legislation that gives broad legal recognition to electronic signatures. Washington State is currently the only state that has not updated its electronic signature statute to comport with modern technology and ways of doing business. As a result, Washington's Electronic Authentication Act is likely preempted by federal law, and it presents an uncertain environment for electronic contracting. This Comment argues that Washington should join the overwhelming majority of states in adopting the Uniform Electronic Transactions Act to optimize its statutory framework for facilitating electronic contracting.

INTRODUCTION

Unique like a thumbprint, pen-and-paper signatures have historically been essential to creating binding legal documents and commercial transactions.(fn1) Today, the forms that modern signatures take would be unrecognizable to our great-grandparents' generation. The modern pledge may now be made by sending an email, clicking a button on a website, or using sophisticated asymmetric cryptography technology, among others.(fn2)

Congress and state legislatures have tried to keep pace with this technology in order to create parity between electronic and pen-and-paper signatures.(fn3) Around the mid-1990s, states began adopting laws giving legal recognition to various forms of electronic signatures.(fn4) States like Utah(fn5) and Washington(fn6) only narrowly recognized "digital signatures" that followed specific security protocols to confirm a signer's identity.(fn7) Other states took a broader approach and gave legal recognition to any type of electronic signature.(fn8) In response to this patchwork of state laws, the Uniform Law Commission issued a model state law in 1999, the Uniform Electronic Transactions Act (UETA),(fn9) which broadly recognized all kinds of electronic signatures.(fn10)

Despite the promulgation of UETA, the federal government feared that states would be slow to adopt UETA, and it sought to speed the adoption of a uniform, nationwide law.(fn11) In 2000, Congress passed the Electronic Signatures in Global and National Commerce Act (ESIGN),(fn12) which gives broad legal recognition to electronic signatures(fn13) and governs all interstate and international electronic transactions.(fn14) While ESIGN borrowed similar concepts and provisions from UETA, the two are not identical.(fn15) For example, ESIGN adds heightened consumer consent requirements,(fn16) but it lacks other guidelines found in UETA, such as provisions regarding attribution disputes.(fn17) In light of these similarities and differences, Congress added a unique preemption provision to ESIGN: a state that enacts the official version of UETA is exempt from federal preemption under ESIGN; a state that enacts anything other than the official version of UETA is preempted to the extent that the law either conflicts with ESIGN or prefers certain technologies over others.(fn18)

To date, all states have enacted UETA except for Illinois, New York, and Washington.(fn19) Washington's law was originally drafted to give legal effect to digital signatures(fn20)-a subset of electronic signatures that uses specific, secure technology-and it has been amended only superficially to incorporate all types of electronic signatures.(fn21) While Illinois(fn22) and New York(fn23) have laws that more closely mirror UETA and ESIGN respectively, Washington's Electronic Authentication Act (WEAA) remains a relative outlier; this outlier status creates uncertainty as to whether the statute, if challenged, would survive a preemption analysis under ESIGN. Of particular concern to UETA advocates is that Washington State-home to such e-commerce pioneers as Amazon.com, Microsoft, and Expedia-trails behind all other states in its electronic signature laws.(fn24) In light of these concerns, a bill was introduced in the Washington State legislature to adopt UETA in 2012, but it died in committee.(fn25) As of this writing, no new legislation has been introduced on the matter.

Part I of this Comment reviews the development of electronic signatures and early state responses to modern electronic signatures. Part II reviews UETA, its approach to giving legal recognition to electronic signatures, and early state adoption of the model law. Part III outlines the federal response to electronic signatures through ESIGN and the peculiar preemption provisions contained therein. Part IV describes Washington's electronic signature statute, the Electronic Authentication Act, and recent legislative efforts to adopt UETA. Finally, Part V argues that Washington's Electronic Authentication Act is preempted by ESIGN. Instead of operating under the current status quo, Washington should clarify the state of the law and facilitate electronic commerce by adopting UETA.

I. THE RISE OF ELECTRONIC SIGNATURES INVITES A JUDICIAL AND LEGISLATIVE RESPONSE

Although electronic signatures have existed for many years, their use exploded with the rise of electronic contracting, creating new concerns about contract formation and enforcement.(fn26) In response, states adopted varying laws to give legal recognition to e-signatures.(fn27) Some of these laws favored "digital signatures," a subset of electronic signatures that uses secure technology to verify the user's identity and the integrity of the transaction.(fn28) Other states took a more neutral approach and broadly recognized all types of electronic signatures.(fn29) Still other states took an intermediate approach or simply did nothing at all.(fn30)

A. Electronic Signatures Take Many Different Forms and Their Use Has Proliferated in Recent Years

Electronic signatures have existed for as long as the technology used to record them. As early as 1867, courts recognized a telegraphed signature to satisfy the Statute of Frauds.(fn31) As new technologies were invented, courts followed by recognizing the legal validity of signatures communicated by telephone to an operator,(fn32) via tape recordings of an oral agreement,(fn33) and by facsimile.(fn34)

Today, the use of electronic signatures in commercial transactions has exploded with the advent of computer technology.(fn35) With ever-developing advances in hardware and software, the forms that an electronic signature can take are also constantly evolving.(fn36) For example, in the early days of commercial computing, electronic data interchange (EDI) emerged as a means for communicating standardized forms such as purchase orders, invoices, and shipping notices between two businesses irrespective of the particular hardware or software implemented at either end of the transmission.(fn37) EDI was particularly effective between businesses with an established trade relationship, as they could sign traditional paper agreements governing the exchange of electronic messages between themselves.(fn38)

Another early form of computerized electronic signatures emerged in the 1970s: "digital signatures," a kind of electronic signature that uses secure cryptographic technology known as public key infrastructure (PKI)(fn39) to ensure authentication of sender identity, data integrity, and non-repudiation.(fn40) Digital signatures do not look like traditional signatures and are better understood as a "signature by process to the document."(fn41) PKI technology today enables millions of consumers around the world to enter into online transactions, where, for example, a consumer logs on to a secure web site like eBay or Amazon to make a purchase.(fn42) Although the underlying technology of digital signatures is beyond the scope of this Comment, it is important to understand that digital signatures-as opposed to electronic signatures generally-refer to technology that employs specific procedures and third-party entities to verify the authenticity of electronic communications.(fn43) In other words, digital signature technology ensures that a party contracting online, such as Amazon.com or eBay, is who they say they are, but digital signatures alone do not evidence assent to create a contract.(fn44)

While EDI and PKI technology are important examples, they do not constitute the universe of electronic signatures. An electronic signature could be as simple as "a digitized image of paper signatures, typed notations such as '/s/ John Smith,'" or even an email signature block.(fn45) As history shows, the possible forms that electronic signatures can take are limited only by the types of technologies that can record and transmit them.(fn46)

B. State Legislatures Responded to the Rise of Electronic Transactions by Passing a Range of Electronic Signature Laws

At common law, the form a signature takes is usually less important than the intent behind the signature to form a legally binding document.(fn47) However, as business transactions began to move online, laws regarding fraud, contract formation, and breach of contract became less certain.(fn48) Concerns about contract formation are particularly acute in online retail transactions where "the closest thing...