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S.B. 125

             1     

UNIFORM ELECTRONIC TRANSACTIONS ACT

             2     
2000 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Lyle W. Hillyard

             5      AN ACT RELATING TO ESTABLISHING CRITERIA, PROCEDURES, AND LEGAL
             6      STANDARDS GOVERNING ELECTRONIC TRANSACTIONS; AUTHORIZING STATE
             7      AGENCIES TO MAKE RULES DEFINING TRANSACTIONS THAT WILL AND WILL NOT
             8      BE CONDUCTED ELECTRONICALLY; h REQUIRING STATE AGENCIES TO COMPLY WITH
             8a      EXISTING RECORD RETENTION REQUIREMENTS; h AND AUTHORIZING THE CHIEF
             8b      INFORMATION
             9      OFFICER TO PREPARE MODEL RULES AND STANDARDS TO ASSIST STATE
             10      AGENCIES.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      ENACTS:
             13          46-4-101, Utah Code Annotated 1953
             14          46-4-102, Utah Code Annotated 1953
             15          46-4-103, Utah Code Annotated 1953
             16          46-4-104, Utah Code Annotated 1953
             17          46-4-105, Utah Code Annotated 1953
             18          46-4-106, Utah Code Annotated 1953
             19          46-4-201, Utah Code Annotated 1953
             20          46-4-202, Utah Code Annotated 1953
             21          46-4-203, Utah Code Annotated 1953
             22          46-4-204, Utah Code Annotated 1953
             23          46-4-205, Utah Code Annotated 1953
             24          46-4-301, Utah Code Annotated 1953
             25          46-4-302, Utah Code Annotated 1953
             26          46-4-401, Utah Code Annotated 1953
             27          46-4-402, Utah Code Annotated 1953
             28          46-4-403, Utah Code Annotated 1953
             29          46-4-501, Utah Code Annotated 1953
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 46-4-101 is enacted to read:
             32     
CHAPTER 4. UNIFORM ELECTRONIC TRANSACTIONS ACT

             33     
Part 1. Title, Interpretation, and Definitions

             34          46-4-101. Title.
             35          This chapter is known as the "Uniform Electronic Transactions Act."
             36          Section 2. Section 46-4-102 is enacted to read:
             37          46-4-102. Definitions.
             38          As used in this chapter:
             39          (1) "Agreement" means the bargain of the parties in fact, as found in their language or
             40      inferred from other circumstances and from rules, regulations, and procedures given the effect of
             41      agreements under laws otherwise applicable to a particular transaction.
             42          (2) "Automated transaction" means a transaction conducted or performed, in whole or in
             43      part, by electronic means or electronic records, in which the acts or records of one or both parties
             44      are not reviewed by an individual in the ordinary course in forming a contract, performing under
             45      an existing contract, or fulfilling an obligation required by the transaction.
             46          (3) "Computer program" means a set of statements or instructions to be used directly or
             47      indirectly in an information processing system in order to bring about a certain result.
             48          (4) "Contract" means the total legal obligation resulting from the parties' agreement as
             49      affected by this chapter and other applicable law.
             50          (5) "Electronic" means relating to technology having electrical, digital, magnetic, wireless,
             51      optical, electromagnetic, or similar capabilities.
             52          (6) "Electronic agent" means a computer program or an electronic or other automated
             53      means used independently to initiate an action or respond to electronic records or performances
             54      in whole or in part, without review or action by an individual.
             55          (7) "Electronic record" means a record created, generated, sent, communicated, received,
             56      or stored by electronic means.
             57          (8) "Electronic signature" means an electronic sound, symbol, or process attached to or
             58      logically associated with a record and executed or adopted by a person with the intent to sign the


             59      record.
             60          (9) "Governmental agency" means an executive, legislative, or judicial agency,
             61      department, board, commission, authority, institution, or instrumentality of the federal government
             62      or of a state or of a county, municipality, or other political subdivision of a state.
             63          (10) "Information" means data, text, images, sounds, codes, computer programs, software,
             64      databases, or the like.
             65          (11) "Information processing system" means an electronic system for creating, generating,
             66      sending, receiving, storing, displaying, or processing information.
             67          (12) "Person" means an individual, corporation, business trust, estate, trust, partnership,
             68      limited liability company, association, joint venture, governmental agency, public corporation, or
             69      any other legal or commercial entity.
             70          (13) "Record" means information that is inscribed on a tangible medium or that is stored
             71      in an electronic or other medium and is retrievable in perceivable form.
             72          (14) (a) "Security procedure" means a procedure employed for the purpose of verifying that
             73      an electronic signature, record, or performance is that of a specific person or for detecting changes
             74      or errors in the information in an electronic record.
             75          (b) "Security procedure" includes a procedure that requires the use of algorithms or other
             76      codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.
             77          (15) (a) "State" means a state of the United States, the District of Columbia, Puerto Rico,
             78      the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction
             79      of the United States.
             80          (b) "State" includes an Indian tribe or band, or Alaskan native village, that is recognized
             81      by federal law or formally acknowledged by a state.
             82          (16) "Transaction" means an action or set of actions occurring between two or more
             83      persons relating to the conduct of business, commercial, or governmental affairs.
             84          Section 3. Section 46-4-103 is enacted to read:
             85          46-4-103. Scope.
             86          (1) Except as otherwise provided in Subsection (2), this chapter applies to electronic
             87      records and electronic signatures relating to a transaction.
             88          (2) This chapter does not apply to:
             89          (a) a transaction to the extent it is governed by a law governing the creation and execution


             90      of wills, codicils, or testamentary trusts;
             91          (b) Title 70A, Uniform Commercial Code, other than:
             92          (i) Sections 70A-1-107 and 70A-1-206 ; and
             93          (ii) Title 70A, Chapter 2, and Title 70A, Chapter 2a.
             94          (3) This chapter applies to an electronic record or electronic signature otherwise excluded
             95      from the application of this chapter under Subsection (2) to the extent it is governed by a law other
             96      than those specified in Subsection (2).
             97          (4) A transaction subject to this chapter is also subject to other applicable substantive law.
             98          (5) Nothing in this chapter requires any county recorder to accept for recording any
             99      instrument in electronic form.
             100          Section 4. Section 46-4-104 is enacted to read:
             101          46-4-104. Prospective application.
             102          This chapter applies to any electronic record or electronic signature created, generated, sent,
             103      communicated, received, or stored on or after May 1, 2000.
             104          Section 5. Section 46-4-105 is enacted to read:
             105          46-4-105. Use of electronic records and electronic signatures -- Variation by
             106      agreement.
             107          (1) This chapter does not require a record or signature to be created, generated, sent,
             108      communicated, received, stored, or otherwise processed or used by electronic means or in
             109      electronic form.
             110          (2) (a) This chapter applies only to transactions between parties each of which has agreed
             111      to conduct transactions by electronic means.
             112          (b) Whether or not the parties agree to conduct a transaction by electronic means is
             113      determined from the context and surrounding circumstances, including the parties' conduct.
             114          (3) (a) A party that agrees to conduct a transaction by electronic means may refuse to
             115      conduct other transactions by electronic means.
             116          (b) The right granted by this Subsection (3)(a) may not be waived by agreement.
             117          (4) (a) Except as otherwise provided in this chapter, the effect of any of its provisions may
             118      be varied by agreement.
             119          (b) The presence in certain provisions of this chapter of the words "unless otherwise
             120      agreed," or words of similar import, does not imply that the effect of other provisions may not be


             121      varied by agreement.
             122          (5) Whether an electronic record or electronic signature has legal consequences is
             123      determined by this chapter and other applicable law.
             124          Section 6. Section 46-4-106 is enacted to read:
             125          46-4-106. Construction and application.
             126          This chapter must be construed and applied:
             127          (1) to facilitate electronic transactions consistent with other applicable law;
             128          (2) to be consistent with reasonable practices concerning electronic transactions and with
             129      the continued expansion of those practices; and
             130          (3) to effectuate its general purpose to make uniform the law with respect to the subject
             131      of this chapter among the states enacting it.
             132          Section 7. Section 46-4-201 is enacted to read:
             133     
Part 2. Legal Status and Requirements of Electronic Records, Signatures, and Contracts

             134          46-4-201. Legal recognition of electronic records, electronic signatures, and electronic
             135      contracts.
             136          (1) A record or signature may not be denied legal effect or enforceability solely because
             137      it is in electronic form.
             138          (2) A contract may not be denied legal effect or enforceability solely because an electronic
             139      record was used in its formation.
             140          (3) If a law requires a record to be in writing, an electronic record satisfies the law.
             141          (4) If a law requires a signature, an electronic signature satisfies the law.
             142          Section 8. Section 46-4-202 is enacted to read:
             143          46-4-202. Provision of information in writing -- Presentation of records.
             144          (1) (a) If parties have agreed to conduct a transaction by electronic means and a law
             145      requires a person to provide, send, or deliver information in writing to another person, the
             146      requirement is satisfied if the information is provided, sent, or delivered, as the case may be, in an
             147      electronic record capable of retention by the recipient at the time of receipt.
             148          (b) An electronic record is not capable of retention by the recipient if the sender or its
             149      information processing system inhibits the ability of the recipient to print or store the electronic
             150      record.
             151          (2) If a law other than this chapter requires a record to be posted or displayed in a certain


             152      manner, to be sent, communicated, or transmitted by a specified method, or to contain information
             153      that is formatted in a certain manner, the following rules apply:
             154          (a) the record must be posted or displayed in the manner specified in the other law;
             155          (b) except as otherwise provided in Subsection (4)(b), the record must be sent,
             156      communicated, or transmitted by the method specified in the other law; and
             157          (c) the record must contain the information formatted in the manner specified in the other
             158      law.
             159          (3) If a sender inhibits the ability of a recipient to store or print an electronic record, the
             160      electronic record is not enforceable against the recipient.
             161          (4) The requirements of this section may not be varied by agreement, but:
             162          (a) to the extent a law other than this chapter requires information to be provided, sent, or
             163      delivered in writing but permits that requirement to be varied by agreement, the requirement under
             164      Subsection (1) that the information be in the form of an electronic record capable of retention may
             165      also be varied by agreement; and
             166          (b) a requirement under a law other than this chapter to send, communicate, or transmit
             167      a record by first-class mail, postage prepaid or regular United States mail, may be varied by
             168      agreement to the extent permitted by the other law.
             169          Section 9. Section 46-4-203 is enacted to read:
             170          46-4-203. Attribution and effect of electronic record and electronic signature.
             171          (1) (a) An electronic record or electronic signature is attributable to a person if it was the
             172      act of the person.
             173          (b) The act of the person may be shown in any manner, including a showing of the
             174      efficacy of any security procedure applied to determine the person to which the electronic record
             175      or electronic signature was attributable.
             176          (2) The effect of an electronic record or electronic signature attributed to a person under
             177      Subsection (1) is determined from the context and surrounding circumstances at the time of its
             178      creation, execution, or adoption, including the parties' agreement, if any, and otherwise as provided
             179      by law.
             180          Section 10. Section 46-4-204 is enacted to read:
             181          46-4-204. Effect of change or error.
             182          (1) If a change or error in an electronic record occurs in a transmission between parties to


             183      a transaction, the following rules apply:
             184          (a) If the parties have agreed to use a security procedure to detect changes or errors and
             185      one party has conformed to the procedure, but the other party has not, and the nonconforming party
             186      would have detected the change or error had that party also conformed, the conforming party may
             187      avoid the effect of the changed or erroneous electronic record.
             188          (b) In an automated transaction involving an individual, the individual may avoid the effect
             189      of an electronic record that resulted from an error made by the individual in dealing with the
             190      electronic agent of another person if the electronic agent did not provide an opportunity for the
             191      prevention or correction of the error and, at the time the individual learns of the error, the
             192      individual:
             193          (i) promptly notifies the other person of the error and that the individual did not intend to
             194      be bound by the electronic record received by the other person;
             195          (ii) takes reasonable steps, including steps that conform to the other person's reasonable
             196      instructions, to return to the other person or, if instructed by the other person, to destroy the
             197      consideration received, if any, as a result of the erroneous electronic record; and
             198          (iii) has not used or received any benefit or value from the consideration, if any, received
             199      from the other person.
             200          (2) If neither Subsection (1)(a) or (b) applies, the change or error has the effect provided
             201      by other law, including the law of mistake, and the parties' contract, if any.
             202          (3) Subsections (1)(b) and (2) may not be varied by agreement.
             203          Section 11. Section 46-4-205 is enacted to read:
             204          46-4-205. Notarization and acknowledgment.
             205          If a law requires a signature or record to be notarized, acknowledged, verified, or made
             206      under oath, the requirement is satisfied by following the procedures and requirements of
             207      Subsection 46-1-16 (7).
             208          Section 12. Section 46-4-301 is enacted to read:
             209     
Part 3. Retention and Admissibility of Electronic Records

             210          46-4-301. Retention of electronic records -- Originals.
             211          (1) If a law requires that a record be retained, the requirement is satisfied by retaining an
             212      electronic record of the information in the record that:
             213          (a) accurately reflects the information set forth in the record after it was first generated in


             214      its final form as an electronic record or otherwise; and
             215          (b) remains accessible for later reference.
             216          (2) A requirement to retain a record in accordance with Subsection (1) does not apply to
             217      any information the sole purpose of which is to enable the record to be sent, communicated, or
             218      received.
             219          (3) A person may satisfy Subsection (1) by using the services of another person if the
             220      requirements of Subsection (1) are satisfied.
             221          (4) If a law requires a record to be presented or retained in its original form, or provides
             222      consequences if the record is not presented or retained in its original form, that law is satisfied by
             223      an electronic record retained in accordance with Subsection (1).
             224          (5) If a law requires retention of a check, that requirement is satisfied by retention of an
             225      electronic record of the information on the front and back of the check in accordance with
             226      Subsection (1).
             227          (6) A record retained as an electronic record in accordance with Subsection (1) satisfies
             228      a law requiring a person to retain a record for evidentiary, audit, or like purposes, unless a law
             229      enacted after May 1, 2000, specifically prohibits the use of an electronic record for the specified
             230      purpose.
             231          (7) This section does not preclude a governmental agency from specifying additional
             232      requirements for the retention of a record subject to the agency's jurisdiction.
             233          Section 13. Section 46-4-302 is enacted to read:
             234          46-4-302. Admissibility in evidence.
             235          In a proceeding, evidence of a record or signature may not be excluded solely because it
             236      is in electronic form.
             237          Section 14. Section 46-4-401 is enacted to read:
             238     
Part 4. Automated Transactions, Sending and Receiving Electronic Records, and

             239     
Transferable Records

             240          46-4-401. Automated transaction.
             241          In an automated transaction, the following rules apply:
             242          (1) A contract may be formed by the interaction of electronic agents of the parties, even
             243      if no individual was aware of or reviewed the electronic agents' actions or the resulting terms and
             244      agreements.


             245          (2) A contract may be formed by the interaction of an electronic agent and an individual,
             246      acting on the individual's own behalf or for another person, including by an interaction in which
             247      the individual performs actions that the individual is free to refuse to perform and which the
             248      individual knows or has reason to know will cause the electronic agent to complete the transaction
             249      or performance.
             250          (3) The terms of the contract are determined by the substantive law applicable to it.
             251          Section 15. Section 46-4-402 is enacted to read:
             252          46-4-402. Time and place of sending and receipt.
             253          (1) Unless otherwise agreed between the sender and the recipient, an electronic record is
             254      sent when it:
             255          (a) is addressed properly or otherwise directed properly to an information processing
             256      system that the recipient has designated or uses for the purpose of receiving electronic records or
             257      information of the type sent and from which the recipient is able to retrieve the electronic record;
             258          (b) is in a form capable of being processed by that system; and
             259          (c) enters an information processing system outside the control of the sender or of a person
             260      that sent the electronic record on behalf of the sender or enters a region of the information
             261      processing system designated or used by the recipient that is under the control of the recipient.
             262          (2) Unless otherwise agreed between a sender and the recipient, an electronic record is
             263      received when:
             264          (a) it enters an information processing system that the recipient has designated or uses for
             265      the purpose of receiving electronic records or information of the type sent and from which the
             266      recipient is able to retrieve the electronic record; and
             267          (b) it is in a form capable of being processed by that system.
             268          (3) Subsection (2) applies even if the place the information processing system is located
             269      is different from the place the electronic record is deemed to be received under Subsection (4).
             270          (4) (a) Unless otherwise expressly provided in the electronic record or agreed between the
             271      sender and the recipient, an electronic record is deemed to be sent from the sender's place of
             272      business and to be received at the recipient's place of business.
             273          (b) For purposes of this Subsection (4), the following rules apply:
             274          (i) If the sender or recipient has more than one place of business, the place of business of
             275      that person is the place having the closest relationship to the underlying transaction.


             276          (ii) If the sender or the recipient does not have a place of business, the place of business
             277      is the sender's or recipient's residence, as the case may be.
             278          (5) An electronic record is received under Subsection (2) even if no individual is aware
             279      of its receipt.
             280          (6) Receipt of an electronic acknowledgment from an information processing system
             281      described in Subsection (2) establishes that a record was received but, by itself, does not establish
             282      that the content sent corresponds to the content received.
             283          (7) (a) If a person is aware that an electronic record purportedly sent under Subsection (1),
             284      or purportedly received under Subsection (2), was not actually sent or received, the legal effect of
             285      the sending or receipt is determined by other applicable law.
             286          (b) Except to the extent permitted by the other law, the requirements of this Subsection
             287      (7) may not be varied by agreement.
             288          Section 16. Section 46-4-403 is enacted to read:
             289          46-4-403. Transferable records.
             290          (1) As used in this section, "transferable record" means an electronic record that:
             291          (a) would be a note under Title 70A, Chapter 3, or a document under Title 70A, Chapter
             292      7, if the electronic record were in writing; and
             293          (b) the issuer of the electronic record expressly has agreed is a transferable record.
             294          (2) A person has control of a transferable record if a system employed for evidencing the
             295      transfer of interests in the transferable record reliably establishes that person as the person to which
             296      the transferable record was issued or transferred.
             297          (3) A system satisfies Subsection (2), and a person is deemed to have control of a
             298      transferable record, if the transferable record is created, stored, and assigned in such a manner that:
             299          (a) a single authoritative copy of the transferable record exists that is unique, identifiable,
             300      and, except as otherwise provided in Subsections (3)(d), (e), and (f), unalterable;
             301          (b) the authoritative copy identifies the person asserting control as:
             302          (i) the person to which the transferable record was issued; or
             303          (ii) if the authoritative copy indicates that the transferable record has been transferred, the
             304      person to which the transferable record was most recently transferred;
             305          (c) the authoritative copy is communicated to and maintained by the person asserting
             306      control or its designated custodian;


             307          (d) copies or revisions that add or change an identified assignee of the authoritative copy
             308      can be made only with the consent of the person asserting control;
             309          (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a
             310      copy that is not the authoritative copy; and
             311          (f) any revision of the authoritative copy is readily identifiable as authorized or
             312      unauthorized.
             313          (4) (a) Except as otherwise agreed, a person having control of a transferable record is the
             314      holder, as defined in Subsection 70A-1-201 (20), of the transferable record and has the same rights
             315      and defenses as a holder of an equivalent record or writing under Title 70A, Uniform Commercial
             316      Code, including, if the applicable statutory requirements under Subsection 70A-3-302 (1), Section
             317      70A-7-501 , or Section 70A-9-308 are satisfied, the rights and defenses of a holder in due course,
             318      a holder to which a negotiable document of title has been duly negotiated, or a purchaser,
             319      respectively.
             320          (b) Delivery, possession, and indorsement are not required to obtain or exercise any of the
             321      rights under Subsection (4)(a).
             322          (5) Except as otherwise agreed, an obligor under a transferable record has the same rights
             323      and defenses as an equivalent obligor under equivalent records or writings under Title 70A,
             324      Uniform Commercial Code.
             325          (6) (a) If requested by a person against which enforcement is sought, the person seeking
             326      to enforce the transferable record shall provide reasonable proof that the person is in control of the
             327      transferable record.
             328          (b) Proof may include access to the authoritative copy of the transferable record and
             329      related business records sufficient to review the terms of the transferable record and to establish
             330      the identity of the person having control of the transferable record.
             331          Section 17. Section 46-4-501 is enacted to read:
             332     
Part 5. Electronic Records in Government Agencies

             333          46-4-501. Creation and retention of electronic records and conversion of written
             334      records by governmental agencies.
             335          (1) A state governmental agency may, by following the procedures and requirements of
             336      Title 63, Chapter 46a, Utah Administrative Rulemaking Act, make rules that:
             337          (a) identify specific transactions that the agency is willing to conduct by electronic means;


             338          (b) identify specific transactions that the agency will never conduct by electronic means;
             339          (c) specify the manner and format in which electronic records must be created, generated,
             340      sent, communicated, received, and stored, and the systems established for those purposes;
             341          (d) if law or rule requires that the electronic records must be signed by electronic means,
             342      specify the type of electronic signature required, the manner and format in which the electronic
             343      signature must be affixed to the electronic record, and the identity of, or criteria that must be met,
             344      by any third party used by a person filing a document to facilitate the process;
             345          (e) specify control processes and procedures as appropriate to ensure adequate
             346      preservation, disposition, integrity, security, confidentiality, and auditability of electronic records;
             347      and
             348          (f) identify any other required attributes for electronic records that are specified for
             349      corresponding nonelectronic records or that are reasonably necessary under the circumstances.
             350          (2) A state governmental agency that makes rules under this section shall submit copies
             351      of those rules, and any amendments to those rules, to:
             352          (a) the chief information officer established by Section 63D-1-301 ; and
             353          (b) the Utah Information Technology Commission established by Section 63D-1-202 .
             354          (3) (a) The chief information officer may prepare model rules and standards relating to
             355      electronic transactions that encourage and promote consistency and interoperability with similar
             356      requirements adopted by other Utah government agencies, other states, the federal government,
             357      and nongovernmental persons interacting with Utah governmental agencies.
             358          (b) In preparing those model rules and standards, the chief information officer may specify
             359      different levels of standards from which governmental agencies may choose in order to implement
             360      the most appropriate standard for a particular application.
             361          (c) Before submitting any model rules or standards to state governmental agencies for their
             362      adoption as permanent rules, the chief information officer shall submit the model rules and
             363      standards to the Utah Information Technology Commission for its review and suggestions.
             364          (d) Nothing in this Subsection (3) requires a state agency to use the model rules and
             365      standards prepared by the chief information officer when making rules under this section.
             366          (4) Except as provided in Subsection 46-4-301 (6), nothing in this chapter requires any
             367      state governmental agency to:
             368          (a) conduct transactions by electronic means; or


             369          (b) use or permit the use of electronic records or electronic signatures.
             369a          h (5) EACH STATE GOVERNMENTAL AGENCY SHALL:
             369b          (a) ESTABLISH RECORD RETENTION SCHEDULES FOR ANY ELECTRONIC RECORDS
             369c      CREATED OR RECEIVED IN AN ELECTRONIC TRANSACTION ACCORDING TO THE STANDARDS
             369d      DEVELOPED BY THE DIVISION OF ARCHIVES UNDER SUBSECTION 63-2-901(2)(e); AND
             369e          (b) OBTAIN APPROVAL OF THOSE SCHEDULES FROM THE STATE RECORDS COMMITTEE
             369f      AS REQUIRED BY SUBSECTION 63-2-502(1)(b). h




Legislative Review Note
    as of 1-3-00 3:09 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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