US makes digital signatures legally binding

Industry experts are today welcoming the move by the US House of Representatives to recognise digital signatures as legally binding.

Voted in earlier this week by 356 votes to 66, the legislation means legally binding contracts will no longer have to be written and signed on paper. It states: "In any commercial transaction affecting interstate commerce, a contract shall not be denied legal effect or enforceability solely because an electronic signature or record was used in its formation."

The move means businesses can make binding commercial arrangements electronically and consumers can sign up for bank accounts or receive bills online.

But the Bill may still face opposition from The White House, which has been under pressure to veto the legislation following claims from consumer groups that it erodes consumer rights.

But according to Dave Birch, director of IT management consultancy, Consult Hyperion, the provisions for consumers to give their consent should be enough. "Of course a gas company shouldn't be able to force you to accept a bill by email. But in principal, if consumers give informed consent I really don't see a problem."

Mark Reeves, VP EMEA at RSA Security, said the importance of digital signatures should not be underestimated. "Digital signatures are vital if ecommerce is going to take off. They counter one of the biggest concerns and bind identity to a user.

"This legislation endorses the strategy of Public Key Infrastructure (PKI). There is very little point having an electronic commerce community if everything has to be copied into writing - it defeats the point," said Reeves.

Hyperion's Birch added that the move towards electronic documentation could benefit consumers financially. "If companies find it cheaper and easier to put out, for example, bank statements in electronic form, then they may well offer incentives to consumers to accept them electronically."