The Uniform Electronic Transactions Act was created in 1999 to establish a national standard for electronic transactions in the US. It allows for the recognition of electronic documents, deeds, and contracts, and requires electronic records to be as valid as paper records. The act was drafted by the National Conference of Commissioners for Uniform State Laws to prevent confusion and misunderstanding caused by different state laws.
The Uniform Electronic Transactions Act is legislation designed to establish a national standard for electronic transactions nationwide. Drafted in 1999, it was designed to prevent a situation where different standards are set by each of the states, leading to confusion and misunderstanding.
Many of the laws governing financial transactions in the United States are established by the states themselves. For example, state contract law dictates whether a contract can be signed electronically or whether only an actual signature on a contract is permitted. Similarly, state law governs record keeping, especially the retention of paper checks by the banks that honor them. Either way, if the 50 state laws were developed separately, the cost of doing business could rise dramatically as companies and banks struggle to track and observe all the varying permutations of the many different laws.
While there are many areas where the differing laws across many states pose no real problems or barriers to commerce, in the case of electronic transactions, it is to the benefit of all concerned that the same standards are in place nationwide. Due to the fact that it is a state matter, it cannot be legislated by the US Congress. The National Conference of Commissioners for Uniform State Laws (NCCUSL) drafted this act to give all states the ability to adopt the same statute as other states, without any of the problems that might arise if the statute were drafted by a particular state.
The bill provides for the recognition of electronic documents, deeds and contracts, and stipulates that electronically signed documents have the same force as manually signed ones, provided they meet certain basic requirements that also apply to paper documents. For example, with paper documents, a copy must be provided to all parties; if the sender of an electronic document uses computer software which inhibits or prevents the recipient from saving a copy, the contract is unenforceable.
Another important provision of the Uniform Electronic Transactions Act is that, in setting standards for record keeping, it requires electronic records to be as valid as paper records. This is very significant for large organizations with a large volume of paper records, which until then had paid large sums to maintain paper records. Banks, for example, had previously been relieved of their obligation to return all checks they paid to account holders, but were required to keep those checks on file. With the enactment of the Uniform Electronic Transactions Act, they were able to transfer those records electronically and dispose of paper checks.
The Uniform Electronic Transactions Act is one of several laws drafted by the NCCUSL or other similar organizations for the purpose of harmonizing state laws in a number of different areas outside the jurisdiction of Congress. While different states were expected to enact different laws, the growth and sophistication of the United States has dulled against such a patchwork approach to laws governing business, finance, and commerce. Uniform acts such as the Uniform Commercial Code, the Uniform Probate Code and the Uniform Rules of Evidence Act, as well as the Uniform Electronic Transactions Act, have facilitated the smooth and unimpeded conduct of commerce throughout the nation.
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