A r c h i v e d  I n f o r m a t i o n

Electronic 'John Hancocks' Now Legal

A revolution in procedures began last month when a new law went into effect that allows electronic signatures on contracts.

The act, called Electronic Signatures in Global and National Commerce Act, or E-SIGN, allows electronic versions of contracts, signatures and recordkeeping in private commerce to be legally equivalent to the traditional paper-and-ink documents.

Now, people can exchange contracts and other documents without having to meet in person to obtain the proper signatures. As President Clinton said when he signed the bill into law, ?Vast warehouses of paper will be replaced by servers about the size of a VCR.? ED's own student loan programs will benefit from this new law.

The law primarily affects commercial, business and consumer transactions, but the government may be affected in cases where it regulates a transaction between private parties or requires that nonfederal records be retained or filed with a government agency. Agency activities and requirements that involve information but do not relate to business, commercial or consumer transactions are outside the scope of this legislation. Instead, they are addressed by the Government Paperwork Elimination Act (GPEA) (see below).

No person is required to use electronic records, signatures or contracts, and all parties involved must agree to use electronic notices and records. E-SIGN does not require the Department to use electronic transactions, and E-SIGN preserves an agency's right to specify the standards and format of the documents.

Most sections of the act took effect on Oct. 1. ED's student loan programs are specifically addressed by E-SIGN and have an effective date of June 2001.

About GPEA

The Government Paperwork Elimination Act (GPEA) is designed to promote e-commerce by the federal government.

The act requires that, by October 2003, all federal agencies provide the public, including all grantees and other customers, with the option to transact business with agencies electronically. GPEA also states that electronic records and their related electronic signatures are not to be denied legal effect, validity or enforce ability solely because they are in electronic form.

ED recently was scheduled to provide OMB with its first plan for redesigning the Department's transactions and communications to include an electronic option. Craig Luigart, chief information officer, and Amy Comstock with the Office of the General Counsel are ED's leaders in planning and implementing GPEA.

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