UNIFORM ELECTRONIC TRANS BILL

COMMITTEE SUBSTITUTE
FOR
H. B. 4493
(By Delegates Stemple, Amores, Doyle,
Jenkins, Yeager, Overington and Stalnaker)

(Originating in the House Committee on the Judiciary)
[March 2, 2000]

A BILL to amend and reenact article five, chapter thirty-nine of the code of West Virginia, one thousand nine hundred thirty- one, as amended; and to amend said code by adding thereto a new chapter, designated chapter thirty-nine-a, all relating generally to the authorization of electronic signatures where written signatures are currently required; establishing legislative findings; providing definitions; defining duties of the secretary of state and auditor to propose rules authorizing governmental electronic signatures; allowing all governmental entities to participate with certain limitations; providing for adoption of the uniform electronic transactions act with exceptions and additions; providing the scope of the act; providing definitions; authorizing public use of electronic signatures with certain requirements and limitations; providing for the legal recognition of electronic signatures; and providing the effective date.

Be it enacted by the Legislature of West Virginia:

That article five, chapter thirty-nine of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that said code be further amended by adding thereto a new chapter, designated chapter thirty-nine-a, to read as follows:
CHAPTER 39. RECORDS AND PAPERS.
ARTICLE 5. ELECTRONIC SIGNATURES AUTHORIZATION ACT.
§39-5-1. Legislative findings; statement of purpose.

The Legislature finds that the rapid and secure conveyance of signed written transactions, messages and official documents is essential to effective and economical conduct of commercial, governmental and personal affairs; and that technology is available to allow instantaneous transmission of documents and to provide secure means of authorization through electronic signatures. Therefore, it is the purpose of this act to facilitate and promote electronic commerce and online government by clarifying the legal status of electronic records and electronic signatures in the context of writing and signing requirements imposed by law; to permit and encourage the continued expansion of electronic commerce and online government through the operation of free market forces rather than proscriptive legislation; to promote public confidence in the validity, integrity and reliability of electronic commerce and online government; and to promote the development of the legal and business infrastructure necessary to support and encourage electronic commerce and online government.
§39-5-2. Definitions.

As used in this article, the following words shall have the following meanings:

(a) "Certificate" means a computer-based record that:

(1) Identifies the certification authority issuing it;

(2) Names or identifies its subscriber;

(3) Contains the subscriber's public key; and

(4) Is digitally signed by the certification authority issuing it.

(b) "Certification authority" means a person who issues a certificate.

(c) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

(d) "Electronic record" means a record created, generated, sent, communicated, received, or stored by electronic means.

(e) "Electronic signature" means an electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. For the purposes of this article, electronic signatures include, but are not limited to the following:

(1) A "digitized signature" which consists of a handwritten signature entered on a recording device utilizing electronic recording software which simultaneously converts the image created to a digital record and attaches it to the electronic document to which it relates;

(2) A "digital mark" which consists of an electronic code indicating approval or confirmation which is entered into a protected digital record following access protocols which identify the user and require a password, personal identification number, encrypted card or other security device which restricts access to one or more authorized individuals; and

(3) A "digital signature" which consists of a message transformed using an asymmetric cryptosystem so that a person having the initial message and the signer's public key can accurately determine:

(A) Whether the transformed message was created using the private key that corresponds to the signer's public key; and

(B) Whether the initial message has been altered since the message was transformed.

(f) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
§39-5-3. Duties of the secretary of state and state auditor; state agencies use of electronic signatures.

(a) The secretary of state and state auditor shall propose joint legislative rules for promulgation in accordance with the provisions of article three, chapter twenty-nine-a of this code to establish standards and processes to facilitate the use of electronic signatures in all governmental transactions by state agencies subject to chapter twenty-nine-a of this code. These rules shall include minimum standards for secure transactions to assure confidence and efficiency in legally binding electronic document transactions. These rules may be amended from time to time to keep the rules current with new developments in technology and improvements in secured transaction processes. The Legislature also authorizes these rules to be initially promulgated as emergency rules pursuant to article three, chapter twenty-nine-a of this code.

(b) The secretary of state is also designated the certification authority and repository for all governmental agencies which are subject to chapter twenty-nine-a of this code, and shall regulate transactions and digital signature verifications. The secretary may enter into reciprocity agreements with all state and federal governmental entities to promote the efficient governmental use of electronic transactions. The secretary of state may also propose legislative rules for issuing certificates that bind public keys to individuals, and other electronic transaction authentication devices as provided for in section three. The secretary of state is further authorized to contract with a private entity to serve as certification authority for the state of West Virginia. This private certification authority may contract with persons to provide certification service. Any contract entered into must assure the certification authority will meet the requirements of this act and any rules promulgated pursuant to this subsection.

(c) Nothing contained in this act shall be construed to mandate any specific form of technology, process or standard to be the only technology, process or standard which may be utilized by state entities, nor shall limit the secretary of state and state auditor in adopting by legislative rule, alternative technologies to authorize electronic signatures.
§39-5-4. Acceptance of electronic signature by governmental entities in satisfaction of signature requirement.
(a) Any governmental entity may, by appropriate official action, authorize the acceptance of electronic signatures in lieu of original signatures on messages or filings requiring one or more original signatures, subject to the requirements and limitations of chapter thirty-nine-a, article 1 of this code.

(b) Any governmental entity may elect to participate and utilize the secretary of state's digital signature authority and registry. Upon acceptance of and registration with the secretary of state's digital signature authority and registry, the governmental entity's electronic transactions are bound to the regulation of the authority and registry and those rules promulgated thereunder. Any governmental entity not required to participate, but which elects to participate, may withdraw at any time from the program, upon notification of the secretary of state and all others who utilize that entity's digital signature program.

(c) Any governmental entity may adopt, in the manner provided by law, an ordinance, rule or official policy designating the documents on which electronic signatures are authorized, and the type or types of electronic signatures which may be accepted for each type of document. Those governmental entities not subject to the provisions of chapter twenty-nine-a of this code, which proposes to authorize the acceptance of electronic signatures on documents filed with that entity shall give public notice of the proposed adoption in a manner prescribed by law, an ordinance, rule or official policy, but in no case for less than thirty days before adoption.

(d) Any governmental entity which intends to extend, modify or revoke the authority to accept electronic signatures shall do so by the same means and with the same notice as required in this section for adoption.
§39-5-5. Secretary of state; liability.

The secretary of state, serving as authority and repository for governmental entities for signature keys shall revoke any signature key when the secretary has reason to believe that the digital signature key has been stolen, fraudulently used or otherwise compromised. This article creates no liability upon the secretary of state for any transaction compromised by any illegal act or inappropriate uses associated with electronic signatures.
CHAPTER 39A. UNIFORM ELECTRONIC TRANSACTIONS ACT.
ARTICLE 1. NONGOVERNMENTAL ELECTRONIC RECORDS AND SIGNATURES.
§39A-1-1. Short title.

This chapter may be cited as the Uniform Electronic Transactions Act.
§39A-1-2. Definitions.

In this chapter:

(1) "Agreement" means the bargain of the parties in fact, as found in their language or inferred from other circumstances and from rules, regulations and procedures given the effect of agreements under laws otherwise applicable to a particular transaction.

(2) "Automated transaction" means a transaction conducted or performed, in whole or in part, by electronic means or electronic records, in which the acts or records of one or both parties are not reviewed by an individual in the ordinary course in forming a contract, performing under an existing contract, or fulfilling an
obligation required by the transaction.

(3) "Computer program" means a set of statements or instructions to be used directly or indirectly in an information processing system in order to bring about a certain result.

(4) "Contract" means the total legal obligation resulting from the parties' agreement as affected by this chapter and other applicable law.

(5) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic or similar capabilities.

(6) "Electronic agent" means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.

(7) "Electronic record" means a record created, generated, sent, communicated, received or stored by electronic means. Provided, That electronic record does not include a telephone call or a record of a telephone call.

(8) "Electronic signature" means an electronic sound, symbol or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.

(9) "Governmental agency" means an executive, legislative, or judicial agency, department, board, commission, authority, institution, or instrumentality of the federal government or of a state or of a county, municipality or other political subdivision of a state.

(10) "Information" means data, text, images, sounds, codes, computer programs, software, databases or the like.

(11) "Information processing system" means an electronic system for creating, generating, sending, receiving, storing, displaying or processing information.

(12) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, governmental agency, public corporation, or any other legal or commercial entity.

(13) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(14) "Security procedure" means a procedure employed for the purpose of verifying that an electronic signature, record or performance is that of a specific person or for detecting changes or errors in the information in an electronic record. The term includes a procedure that requires the use of algorithms or other
codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.

(15) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States. The term includes an Indian tribe or band or Alaskan native village, which is recognized by federal law or formally acknowledged by a state.

(16) "Transaction" means an action or set of actions occurring between two or more persons relating to the conduct of business, commercial or governmental affairs.
§39A-1-3. Scope.

(a) Except as otherwise provided in subsection (b), this chapter applies to electronic records and electronic signatures relating to a transaction.

(b) This chapter does not apply to a transaction to the extent it is governed by:

(1) A law governing the creation and execution of wills, codicils or testamentary trusts; and

(2) The Uniform Commercial Code other than sections 1-107 and 1-206, article two, and article two-a.

(3) A law which requires written correspondence or notification to be sent by certified or registered mail.

(4) A law which requires correspondence or notification to be written and signed. Provided, That an electric correspondence or notification will satisfy the requirements of such a law if the sender of the electronic correspondence receives an electronic confirmation that the recipient has received and opened the correspondence or notification.

(c) This chapter applies to an electronic record or electronic signature otherwise excluded from the application of this chapter under subsection (b) when used for a transaction subject to a law other than those specified in subsection (b).

(d) A transaction subject to this chapter is also subject to other applicable substantive law.
§39A-1-4. Prospective application.

This chapter applies to any electronic record or electronic
signature created, generated, sent, communicated, received or stored on or after the effective date of this chapter.

§39A-1-5. Use of electronic records and electronic signatures; variation by agreement.

(a) This chapter does not require a record or signature to be created, generated, sent, communicated, received, stored or otherwise processed or used by electronic means or in electronic form.

(b) This chapter applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties' conduct. An agreement to conduct a transaction electronically may not be contained in a standard form contract that is not an electronic record except for a separate and optional agreement the primary purpose of which is to authorize a transaction to be conducted by electronic means. An agreement in such a standard form contract may not be conditioned upon an agreement to conduct transactions electronically. An agreement to conduct transactions electronically may not be inferred solely from the fact that a party has used electronic means to pay an account or register a purchase or warranty. This subdivision may not be varied by agreement.

(c) A party that agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. If a seller sells goods or services by both electronic and non- electronic means and a buyer purchases the goods or services by conducting the transaction electronically, the buyer may refuse to conduct further transactions regarding the goods or services electronically. The right granted by this subsection may not be waived by agreement.

(d) Except as otherwise provided in this chapter, the effect of any of its provisions may be varied by agreement. The presence in certain provisions of this chapter of the words "unless otherwise agreed", or words of similar import, does not imply that the effect of other provisions may not be varied by agreement.

(e) Whether an electronic record or electronic signature has legal consequences is determined by this chapter and other applicable law.

(f) A consumer who makes an agreement to conduct a transaction electronically with a commercial party is entitled to a written copy, on written request and at no charge, of the original contract, notice, or other document communicated to the consumer electronically. Provided, That if the commercial party's postal address is not provided with the records constituting or giving rise to the agreement, then the consumer may request the written copy electronically.

(g) An agreement to conduct a transaction electronically is subject to a requirement of good faith and fair dealing with respect to both the inducement to agree and the implementation of the agreement.

(h) This title does not apply to a transaction entered into for personal, family or household purposes that was solicited or negotiated by any voice communication via telephone.
§39A-1-6. Construction and application.

This chapter must be construed and applied:

(1) To facilitate electronic transactions consistent with other applicable law;

(2) To be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices; and

(3) To effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.
§39A-1-7. Legal recognition of electronic records, electronic signatures and electronic contracts.

(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(d) If a law requires a signature, an electronic signature satisfies the law.

§39A-1-8. Provision of information in writing; presentation of records.

(a) If parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver information in writing to another person, the requirement is satisfied if the information is provided, sent or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.

(b) If a law other than this chapter requires a record: (i) To be posted or displayed in a certain manner; (ii) to be sent, communicated or transmitted by a specified method; or (iii) to contain information that is formatted in a certain manner, the following rules apply:

(1) The record must be posted or displayed in the manner specified in the other law.

(2) Except as otherwise provided in subsection (d)(2), the record must be sent, communicated, or transmitted by the method specified in the other law.

(3) The record must contain the information formatted in the manner specified in the other law.

(c) If a sender inhibits the ability of a recipient to store or print an electronic record, the electronic record is not enforceable against the recipient.

(d) The requirements of this section may not be varied by agreement, but:

(1) To the extent a law other than this chapter requires information to be provided, sent or delivered in writing but permits that requirement to be varied by agreement, the requirement under subsection (a) that the information be in the form of an electronic record capable of retention may also be varied by agreement; and

(2) A requirement under a law other than this chapter to send, communicate or transmit a record by, may be varied by agreement to the extent permitted by the other law.
§39A-1-9. Attribution and effect of electronic record and electronic signature.

(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.

(b) The effect of an electronic record or electronic signature attributed to a person under subsection (a) is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties' agreement, if any, and otherwise as provided by law.
§39A-1-10. Effect of change or error.

If a change or error in an electronic record occurs in a transmission between parties to a transaction, the following rules apply:

(1) If the parties have agreed to use a security procedure to detect changes or errors and one party has conformed to the procedure, but the other party has not, and the nonconforming party would have detected the change or error had that party also conformed, the conforming party may avoid the effect of the changed
or erroneous electronic record.

(2) In an automated transaction involving an individual, the individual may avoid the effect of an electronic record that resulted from an error made by the individual in dealing with the electronic agent of another person if the electronic agent did not provide an opportunity for the prevention or correction of the error and, at the time the individual learns of the error, the individual:

(A) Promptly notifies the other person of the error and that the individual did not intend to be bound by the electronic record received by the other person;

(B) Takes reasonable steps, including steps that conform to the other person's reasonable instructions, to return to the other person or, if instructed by the other person, to destroy the consideration received, if any, as a result of the erroneous electronic record; and

(3) If neither paragraph (1) nor paragraph (2) applies, the change or error has the effect provided by other law, including the law of mistake, and the parties' contract, if any.

(4) Paragraphs (2) and (3) may not be varied by agreement.
§39A-1-11. Notarization and acknowledgment.

If a law requires a signature or record to be acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record. Provided, That if a law requires the notarization of a record an electronic signature may not satisfy that requirement.
§39A-1-12. Retention of electronic records; originals.

(a) If a law requires that a record be retained, the requirement is satisfied by retaining an electronic record of
the information in the record which:

(1) Accurately reflects the information set forth in the record at the time it was first generated in its final form as an electronic record or otherwise; and

(2) Remains accessible for later reference.

(b) A requirement to retain a record in accordance with subsection (a) does not apply to any information the sole purpose of which is to enable the record to be sent, communicated or received.

(c) A person may satisfy subsection (a) by using the services of another person if the requirements of that subsection are satisfied.

(d) If a law requires a record to be presented or retained in its original form, or provides consequences if the record is not presented or retained in its original form, that law is satisfied by an electronic record retained in accordance with subsection (a).

(e) If a law requires retention of a check, that requirement is satisfied by retention of an electronic record of the information on the front and back of the check in accordance with subsection (a).

(f) A record retained as an electronic record in accordance with subsection (a) satisfies a law requiring a person to retain a record for evidentiary, audit, or like purposes, unless a law enacted after the effective date of this chapter specifically prohibits the use of an electronic record for the specified purpose.

(g) This section does not preclude a governmental agency of this state from specifying additional requirements for the retention of a record subject to the agency's jurisdiction.
§39A-1-13. Admissibility in evidence.

In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.
§39A-1-14. Automated transaction.

In an automated transaction, the following rules apply:

(1) A contract may be formed by the interaction of electronic agents of the parties, even if no individual was aware of or reviewed the electronic agents' actions or the resulting terms and agreements.

(2) A contract may be formed by the interaction of an electronic agent and an individual, acting on the individual's own behalf or for another person, including by an interaction in which the individual performs actions that the individual is free to refuse to perform and which the individual knows or has reason to know will cause the electronic agent to complete the transaction or performance.

(3) The terms of the contract are determined by the substantive law applicable to it.
§39A-1-15. Time and place of sending and receipt.

(a) Unless the sender and the recipient agree to a different method of sending that is reasonable under the circumstances, an electronic record is sent when it:

(1) Is addressed properly or otherwise directed properly to an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record;

(2) Is in a form capable of being processed by that system; and

(3) Enters an information processing system outside the control of the sender or of a person that sent the electronic record on behalf of the sender or enters a region of the information processing system designated or used by the recipient which is under the control of the recipient.

(b) Unless the sender and the recipient agree to a different method of receiving that is reasonable under the circumstances, an electronic record is received when:

(1) It enters an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record; and

(2) It is in a form capable of being processed by that system.

(c) Subsection (b) applies even if the place the information processing system is located is different from the place the electronic record is deemed to be received under subsection (d).

(d) Unless otherwise expressly provided in the electronic record or agreed between the sender and the recipient, an electronic record is deemed to be sent from the sender's place of business and to be received at the recipient's place of business. For purposes of this subsection, the following rules apply:

(1) If the sender or recipient has more than one place of business, the place of business of that person is the place having the closest relationship to the underlying transaction.

(2) If the sender or the recipient does not have a place of business, the place of business is the sender's or recipient's residence, as the case may be.

(3) Notwithstanding any other provision of this title, if an individual enters into a transaction for personal, family or household purposes that is created or documented by an electronic record, the transaction shall be deemed to have been made or to have occurred at the individual's residence. This subsection is not variable by agreement.

(e) An electronic record is received under subsection (b) even if no individual is aware of its receipt.

(f) Receipt of an electronic acknowledgment from an information processing system described in subsection (b) establishes that a record was received but, by itself, does not establish that the content sent corresponds to the content received.

(g) If a person is aware that an electronic record purportedly sent under subsection (a), or purportedly received under subsection (b), was not actually sent or received, the legal effect of the sending or receipt is determined by other applicable law. Except to the extent permitted by the other law, the requirements of this
subsection may not be varied by agreement.

(h) Notwithstanding any other section of this Act, a record has not been received unless it is received by the intended recipient in a manner in which it can be opened and read by that recipient.
§39A-1-16. Notice of Cancellation.
If a law other than this title requires that a notice of the right to cancel be provided or sent, an electronic record may not substitute for a writing under that other law unless, in addition to satisfying the requirements of that other law and this title, the notice of cancellation may be returned by electronic means. This section may not be varied by agreement.
§39A-1-17. Transferable records.

(a) In this section, "transferable record" means an electronic record that:

(1) Would be a note under article three of the Uniform Commercial Code or a document under article seven of the Uniform Commercial Code if the electronic record were in writing; and

(2) The issuer of the electronic record expressly has agreed is a transferable record.

(b) A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.

(c) A system satisfies subsection (b), and a person is deemed to have control of a transferable record, if the transferable record is created, stored, and assigned in such a manner that:

(1) A single authoritative copy of the transferable record exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5) and (6), unalterable;

(2) The authoritative copy identifies the person asserting control as:

(A) The person to which the transferable record was issued; or

(B) If the authoritative copy indicates that the transferable record has been transferred, the person to which the transferable record was most recently transferred;

(3) The authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;

(4) Copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;

(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

(6) Any revision of the authoritative copy is readily identifiable as authorized or unauthorized.

(d) Except as provided in sections one hundred one, one hundred two, and one hundred three, article two, chapter forty-six- a of this code, or as otherwise agreed, a person having control of a transferable record is the holder, as defined in section 1-201(20) of the Uniform Commercial Code, of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing under the Uniform Commercial Code, including, if the applicable statutory requirements under section 3-302(a), 7-501, or 9-308 of the Uniform Commercial Code are satisfied, the rights and defenses of a holder in due course, a holder to which a negotiable document of title has been duly negotiated, or a purchaser, respectively. Delivery, possession and indorsement are not required to obtain or exercise any of the rights under this subsection.

(e) Except as otherwise agreed, an obligor under a transferable record has the same rights and defenses as an equivalent obligor under equivalent records or writings under the Uniform Commercial Code.

(f) If requested by a person against which enforcement is sought, the person seeking to enforce the transferable record shall provide reasonable proof that the person is in control of the transferable record. Proof may include access to the authoritative copy of the transferable record and related business records sufficient to review the terms of the transferable record and to establish the identity of the person having control of the transferable record.
§39A-1-18. Effective date.

This chapter takes effect on the first day of July, two thousand.

Article 5, chapter 39, has been completely rewritten; therefore, strike-throughs and underscoring have been omitted.

Chapter 39A is new; therefore, strike-throughs and underscoring have been omitted.