- The Washington Times - Wednesday, June 14, 2000

The House is expected to approve a bipartisan bill today giving electronic contracts the same legal status as documents written on paper.

Banks, insurance companies and government agencies are likely to be among the first to abandon paper and embrace electronic contracts.

"Not everyone is implementing electronic contracts today, but they will," said Brian O'Higgins, chief technology officer at Plano, Texas-based Entrust Technologies Inc., which sells software to create digital signatures.

Rep. Thomas J. Bliley Jr., Virginia Republican and chairman of the House Commerce Committee, chaired the conference committee to reconcile House and Senate versions of electronic contract bills approved in November.

The joint conference committee completed that effort June 8, and the conference report has the support of the Clinton administration and the technology industry.

"This will inspire greater confidence in consumers and encourage the growth of electronic commerce. It will allow consumers and businesses to do a whole new host of transactions on line," Mr. Bliley said.

Digital documents could replace paper contracts for everything from mortgage refinancings to warranties for appliances.

Harris Simmons, chairman and chief executive of Salt Lake City-based Zions Bancorporation, said his bank is preparing to issue digital signatures in a pilot electronic contract project.

"We think [electronic contracts] will be a fundamental element of e-commerce," Mr. Simmons said.

Zions Bancorporation will use the technology to let people apply for loans and sign loan agreements on line, Mr. Simmons said.

"There are all kinds of opportunities to streamline commerce," he said.

Terri Bolling, spokeswoman for Charlotte, N.C.-based Bank of America, said the company has to look no further than the popularity of its Internet banking initiative to find evidence that consumers are willing to use electronic contracts.

"We're seeing a huge surge in the number of people wanting to do business on line," she said.

Bank of America has 2 million on-line banking customers.

The electronic contracts bill doesn't affect existing consumer protection laws.

Consumers will have the option to use electronic documents once the law takes effect March 1 because it contains an opt-in measure, giving digital documents legal authority only if consumers agree to use them.

The new law won't result in a total overhaul of the way businesses and consumers exchange information, said Barry Libeson, vice president of Surety.com Inc., a Reston, Va.-based company that provides a notary service for investment banks using electronic documents.

That's because buying books and many other commodities on line works fine now, he said.

The new law is expected to make digital signatures not really a signature, but a means of encryption more common.

Digital signatures are likely to be the most common method of verifying electronic contracts. Digital signatures are used to confirm who sent a message and to ensure a message hasn't been tampered with.

Digital signatures rely on encryption to transform data to unreadable code.

"Keys" are the secret to the process. Keys have secret values that computers use with algorithms to encrypt and decrypt.

Sending and receiving a transmission requires two keys, so if one person encrypts a message, only the person with a matching key can decipher the transmission.

About 46 states already have their own laws to allow limited use of electronic documents, said Thomas Smedinghoff, a Chicago attorney who serves as chairman of the American Bar Association's division on electronic commerce.

Utah passed the first state electronic contracts law in 1995.

Virginia passed a law in 1998 allowing state and local governments to use electronic signatures. Maryland's General Assembly passed a law in 1998 limiting the legal use of electronic signatures to state government. A 1996 D.C. law limited the use of the signatures to D.C. officials only for buying goods and services.

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