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Contract lawyers, emails and digital signatures

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We had a chat with a top contract lawyer and two big execs from MessagingDirect about digital signatures. The lawyer, Dr Brain Bandy, had done some research on the legal implications of digital signatures for the execs and all of them were keen to educate yours truly on where things should be heading.

To save you the legal ins and outs, the basic conclusion was that email is the only proper way to deal with transactions. The vendor sends you an email with its digital signature on it, then you send it back with your signature, keep a copy and bob's your uncle. So what, you think. Isn't this bleedin obvious?

Yes, it is, but this meeting (they arranged it) was not so much about what is the way forward but rather what isn't. The main concern was the recent reports of what digital signatures mean. Since their entry into law with the Electronic Communications Act this year, digital signatures have largely been sold as 100 per cent legally binding and the only thing that holds ecommerce together. Despite this, many business remain unaware of the Act and the belief remains that digital signatures are "not as legal" as a printed, physically signed document.

This is all arse about face say the boys. Describing digital signatures as merely a drop in the ocean of the legal aspects of electronic commerce, Brian is keen to point out that no signed document is 100 per cent legal - an interesting exception is children, who, apart from a few cases, are not legally bound to a contract - but emails are in some cases more legally binding than signed documents. He is also scathing about attempts to run ecommerce entirely over Web sites. Since Web sites are dynamic, changing objects that cannot be fixed or "owned" as property. The implication of this is a potential timebomb if people don't recognise what they're doing.

This was main point two. That in the same way that Barclays/Woolworths/and so on have knocked back confidence in online security, it will only take a few well-publicised cock-ups concerning digital signatures for the whole process to be set back by months or years. These theoretical cases, they believe, will stem from a misunderstanding of what digital signatures are and what strength they have.

It's a good point and involves a fair bit of foresight. I was assured that now with patent and agreed standards in place and with the banks accepting an authentication process that doesn't require a safety deposit, the way is open for digital signatures to revolutionise business. Transaction speed shoots up, costs plummet and cross-border trade becomes far more worthwhile. One word of caution though: as it is now, if you purchase goods from abroad you are legally bound by the contract laws of that country, not the country you reside in.

Basically, we all need to smarten up a bit about what this new form of purchasing will mean to us. ®

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