BILL NUMBER: SB 97 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Sher
JANUARY 18, 2001
An act to repeal and add Title 2.5 (commencing with Section
1633.1) of Part 2 of Division 3 of the Civil Code, relating to
electronic transactions.
LEGISLATIVE COUNSEL'S DIGEST
SB 97, as introduced, Sher. Electronic transactions.
The existing Uniform Electronic Transactions Act governs the
effect of transactions entered into electronically, and provides,
among other things, that a record or signature may not be denied
legal effect or enforceability solely because it is in electronic
format.
This bill would make various changes to the act.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Title 2.5 (commencing with Section 1633.1) of Part 2 of
Division 3 of the Civil Code is repealed.
SEC. 2. Title 2.5 (commencing with Section 1633.1) is added to
Part 2 of Division 3 of the Civil Code, to read:
TITLE 2.5. UNIFORM ELECTRONIC TRANSACTIONS ACT
1633.1. This title may be cited as the Uniform Electronic
Transactions Act.
1633.2. In this title, the following terms have the following
meanings:
(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 title 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.
(8) "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.
(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.
1633.3. (a) Except as otherwise provided in subdivision (b), this
title applies to electronic records and electronic signatures
relating to a transaction.
(b) This title does not apply to a transaction to the extent it is
governed by any of the following:
(1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.
(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1107 and 1206.
(3) Divisions 3 (commencing with Section 3101), 4 (commencing with
Section 4101), 5 (commencing with Section 5101), 8 (commencing with
Section 8101), 9 (commencing with Section 9101), and 11 (commencing
with Section 11101) of the Uniform Commercial Code.
(c) This title does not apply to any of the following:
(1) Any notice of the cancellation or termination of utility
services (including water, heat, and power).
(2) Any notice of default, acceleration, repossession,
foreclosure, or eviction, or the right to cure, under a credit
agreement secured by, or a rental agreement for, a primary residence
of an individual.
(3) Any notice of the cancellation or termination of health
insurance or benefits or life insurance benefits (excluding
annuities).
(4) Any notice of recall of a product, or material failure of a
product, that risks endangering health or safety.
(5) Any document required to accompany any transportation or
handling of hazardous materials, pesticides, or other toxic or
dangerous materials.
(d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) to the extent it is governed by a law other than
those specified in subdivision (b).
(e) A transaction subject to this title is also subject to other
applicable substantive law.
1633.4. This title applies to any electronic record or electronic
signature created, generated, sent, communicated, received, or
stored on or after January 1, 2002.
1633.5. (a) This title 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 title 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.
(c) A party that agrees to conduct a transaction by electronic
means may refuse to conduct other transactions by electronic means.
The right granted by this subdivision may not be waived by agreement.
(d) Except as otherwise provided in this title, the effect of any
of its provisions may be varied by agreement. The presence in
certain provisions of this title 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 title and other applicable law.
1633.6. This title shall be construed and applied to do all of
the following:
(1) Facilitate electronic transactions consistent with other
applicable law.
(2) Be consistent with reasonable practices concerning electronic
transactions and with the continued expansion of those practices.
(3) Effectuate its general purpose to make uniform the law with
respect to the subject of this title among states enacting it.
1633.7. (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.
(c) If a law requires a record to be in writing, an electronic
record satisfies the law.
(d) If a law requires a signature, an electronic signature
satisfies the law.
1633.8. (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 title 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 paragraph (2) of subdivision
(d), the record shall be sent, communicated, or transmitted by the
method specified in the other law.
(3) The record shall 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, except for the following:
(1) To the extent a law other than this title requires information
to be provided, sent, or delivered in writing but permits that
requirement to be varied by agreement, the requirement under
subdivision (a) that the information be in the form of an electronic
record capable of retention may also be varied by agreement.
(2) A requirement under a law other than this title to send,
communicate, or transmit a record by first-class mail, postage
prepaid, may be varied by agreement to the extent permitted by the
other law.
1633.9. (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 subdivision (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.
1633.10. 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 does all of
the following:
(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.
(C) Does not use or receive any benefit or value from the
consideration, if any, received from the other person.
(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.
1633.11. If a law requires a signature or record to be notarized,
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.
1633.12. (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 that does all of the following:
(1) Accurately reflects the information set forth in the record
after it was first generated in its final form as an electronic
record or otherwise.
(2) Remains accessible for later reference.
(b) A requirement to retain a record in accordance with
subdivision (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 subdivision (a) by using the services of
another person if the requirements of that subdivision 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 subdivision (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 subdivision (a).
(f) A record retained as an electronic record in accordance with
subdivision (a) satisfies a law requiring a person to retain a record
for evidentiary, audit, or like purposes, unless a law enacted after
January 1, 2002 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.
1633.13. In a proceeding, evidence of a record or signature may
not be excluded solely because it is in electronic form.
1633.14. 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.
1633.15. (a) Unless otherwise agreed between the sender and the
recipient, an electronic record is sent when all of the following
occur:
(1) The electronic record 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) The electronic record is in a form capable of being processed
by that system.
(3) The electronic record 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 otherwise agreed between a sender and the recipient, an
electronic record is received when both of the following occur:
(1) The electronic record 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.
(2) The electronic record is in a form capable of being processed
by that system.
(c) Subdivision (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 subdivision (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
subdivision, 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.
(e) An electronic record is received under subdivision (b) even if
no individual is aware of its receipt.
(f) Receipt of an electronic acknowledgment from an information
processing system described in subdivision (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 subdivision (a), or purportedly received under subdivision
(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
subdivision may not be varied by agreement.
1633.16. (a) In this section, "transferable record" means an
electronic record to which both of the following apply:
(1) The electronic record would be a note under Division 3
(commencing with Section 3101) of the Uniform Commercial Code or a
document under Division 7 (commencing with Section 7101) of the
Uniform Commercial Code if the electronic record were in writing.
(2) The issuer of the electronic record expressly has agreed that
it 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 subdivision (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 all of the
following apply:
(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 either of the following:
(A) The person to which the transferable record was issued.
(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.
(6) Any revision of the authoritative copy is readily identifiable
as authorized or unauthorized.
(d) Except as otherwise agreed, a person having control of a
transferable record is the holder, as defined in subdivision (20) of
Section 1201 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 subdivision
(a) of Section 3302, Section 7501, or Section 9308 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.
1633.17. If any provision of this title or its application to any
person or circumstance is held invalid, the invalidity does not
affect other provisions or applications of this title which can be
given effect without the invalid provision or application, and to
this end the provisions of this title are severable.