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Saying Goodbye to the Paper Chase
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Business New Haven
9/16/2002
By: Melissa Nicefaro
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Come October 1, a new state law will make it easier for local companies to conduct business over the Internet.The law, Public Act 02-68, “will promote the use of technology in traditional industries and boost technology company growth by expanding the use and validity of electronic signatures and electronic contracts,” says Kenneth O. Decko, the Connecticut Business & Industry Association's president and chief executive officer.
The bill makes Connecticut's e-commerce regulations consistent with the federal Uniform Electronic Transactions Act. It also includes provisions from the federal Electronic Signatures in Global and National Commerce Act (“E-Sign”) outlining what a company must do if it wishes to provide certain notices to consumers electronically.
Congress passed E-Sign in 1999 to make it easier for companies to transact business electronically. The act provides that electronic signatures and records carry the same legal weight as handwritten signatures and paper records. E-Sign supercedes state law unless the state adopts the Uniform Electronic Transactions Act, which includes provisions dealing with admissibility as evidence, when an electronic record is deemed sent or received, and mistakes or errors in electronic communications.
These are critical aspects of supporting electronic commerce, according to the CBIA.
”The law will prohibit certain documents, such as wills, court orders and notices and utility termination notices from being transacted electronically,” says CBIA's Joe Brennan. The law prohibits electronic usage for notice default or a credit agreement, the cancellation or termination of health insurance or benefits or life insurance benefits, excluding annuities, notice of the recall of a product, or any document required to accompany any transportation or handling of hazardous materials, pesticides or other toxic or dangerous materials.
According to a CBIA survey, 40 percent of companies say they currently purchase goods and services over the Internet, and 71 percent said they used the Internet to send and receive e-mail. The CBIA had urged passage of the state measure, asserting that it will enable companies to take greater advantage of new technology.
”Both parties have to be in agreement.” Brennan says. “If one does not want to do things electronically, they don't have to. Both parties have to agree.” The electronic contract the parties enter into, the signature and the terms of the contract have the same legal effect as if they were executed on paper.
When a company wishes to purchase goods or services from another company, traditionally the parties would enter into a contract on paper specifying terms.
“For example, a company wants to enter a contract with another company to clean their office,” Brannan explains. “The contract would include the terms like how often the building would be cleaned and compensation for doing the cleaning. That would have been done on paper, but now it can be done by two people sitting at computer terminals.” Instead of a signature with a pen, it would be executed electronically. That contract has the same force and effect as if it were done in writing.
The new state law also allows businesses to store records electronically. “That can translate into big savings for companies that now spend money to warehouse and maintain records,” Decko adds. It also paves the way for businesses to file state tax forms, corporate filings, permits, license applications and other documents online, which is intended to make doing business in Connecticut easier.
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