So far in this series, we have covered what digital signatures are, what they can do for us, and some of the applications of digital signatures in electronic commerce. Now we tackle the weighty issue of the law. How does the law view digital signatures, electronic commerce, and electronic business transactions in general?
There are two schools of thought regarding the legality of digital signatures. One says to do nothing. Digital signatures will come into their own through use by people. If two parties agree to conduct business electronically, and both are happy with that agreement, they can conduct business. If however, one of the parties or even a third party contests the agreement, then the issue needs to be resolved by a court of law. The court will look at all of the documentation associated with the agreement. What sort of contract is there? Did both parties indicate their intent to abide by this agreement? How did they indicate their intent?
The usual method of indicating intent is that both parties pen their signatures to the bottom of a contract. If both parties have applied their digital signatures to an electronic agreement, then the court will need to decide if a digital signature is legally binding. The court will ask if both parties intended their digital signature to be as legally binding as a manual signature. If it is determined that the parties intended their digital signatures to be their attestation of good faith, then the contract will be declared binding, and digital signatures will have a legal definition.
The second school of thought says avoid the litigation process, save the overburdened court system from being bothered with this stuff, and save companies thousands of dollars in legal fees by legislating the use of digital signatures.
Several states have legislated the use of digital signatures. They range all the way from Utah's law which is a hefty tome, to Massachusetts' law which is barely two pages long. Utah defined not only when digital signatures can be used, but also who may issue key pairs and under what circumstances. The Utah law imposes severe penalties on the certificate authority, and strictly controls how keys are issued. The Utah law has undergone several revisions since it was first passed. There are still many who view the law as too restrictive while some view the Massachusetts law as too scant.
What will the law say about digital signatures in the future? Well, I believe that digital signatures will become the norm. I believe that business will be conducted electronically, and that documents will be digitally signed. I believe that eventually, people will come to expect any transaction that they perform over the Internet, including personal mail, to be digitally signed. I expect that at some point in the future, people will not accept documents that are not digitally signed. After all, when you receive snail mail, don't you look first to see who it came from? If it is from someone you know, you open it. If it is junk mail from some unknown address, you toss it. That is, all except that one from Ed McMahon.