As Amended by Senate Committee
Session of 2000
SENATE BILL No. 559
By Committee on Judiciary
2-2
10 AN ACT
concerning electronic transfers; repealing K.S.A. 1999 Supp.
11 60-2616
12
13 Be it enacted by the Legislature of the
State of Kansas:
14 Section
1. This act shall be known and may be cited as the uniform
15 electronic transactions act.
16 Sec. 2. In
this act:
17 (1) ``Agreement''
means the bargain of the parties in fact, as found in
18 their language or inferred from other
circumstances and from rules, reg-
19 ulations, and procedures given the effect
of agreements under laws oth-
20 erwise applicable to a particular
transaction.
21 (2) ``Automated
transaction'' means a transaction conducted or per-
22 formed, in whole or in part, by electronic
means or electronic records, in
23 which the acts or records of one or both
parties are not reviewed by an
24 individual in the ordinary course in
forming a contract, performing under
25 an existing contract or fulfilling an
obligation required by the transaction.
26 (3) ``Computer
program'' means a set of statements or instructions to
27 be used directly or indirectly in an
information processing system in order
28 to bring about a certain result.
29 (4) ``Contract''
means the total legal obligation resulting from the par-
30 ties' agreement as affected by this act and
other applicable law.
31
(5) ``Electronic'' means relating to technology having
electrical, dig-
32 ital, magnetic, wireless, optical,
electromagnetic or similar capabilities.
33 (6) ``Electronic
agent'' means a computer program or an electronic
34 or other automated means used independently
to initiate an action or
35 respond to electronic records or
performances in whole or in part, without
36 review or action by an individual.
37 (7) ``Electronic
record'' means a record created, generated, sent,
38 communicated, received or stored by
electronic means.
39 (8) ``Electronic
signature'' means an electronic sound, symbol or pro-
40 cess attached to or logically associated
with a record and executed or
41 adopted by a person with the intent to sign
the record.
42
(9) ``Governmental agency'' means an executive, legislative,
or judicial
43 agency, department, board, commission,
authority, institution or instru-
2
1 mentality of the federal government
or of a state or of a county, munic-
2 ipality or other political
subdivision of a state.
3
(10) ``Information'' means data, text, images, sounds, codes,
com-
4 puter programs, software, databases
or the like.
5
(11) ``Information processing system'' means an electronic
system for
6 creating, generating, sending,
receiving, storing, displaying or processing
7 information.
8
(12) ``Person'' means an individual, corporation, business
trust, estate,
9 trust, partnership, limited liability
company, association, joint venture,
10 governmental agency, public corporation or
any other legal or commercial
11 entity.
12 (13) ``Record''
means information that is inscribed on a tangible me-
13 dium or that is stored in an electronic or
other medium and is retrievable
14 in perceivable form.
15 (14) ``Security
procedure'' means a procedure employed for the pur-
16 pose of verifying that an electronic
signature, record or performance is
17 that of a specific person or for detecting
changes or errors in the infor-
18 mation in an electronic record. The term
includes a procedure that re-
19 quires the use of algorithms or other
codes, identifying words or numbers,
20 encryption, callback or other
acknowledgment procedures.
21 (15) ``State''
means a state of the United States, the District of Co-
22 lumbia, Puerto Rico, the United States
Virgin Islands or any territory or
23 insular possession subject to the
jurisdiction of the United States. The
24 term includes an Indian tribe or
band, or Alaskan native village, which is
25 recognized by federal law or
formally acknowledged by a state.
26
(16) ``Transaction'' means an action or set of actions
occurring be-
27 tween two or more persons relating to the
conduct of business, commer-
28 cial or governmental affairs.
29 Sec. 3. (a)
Except as otherwise provided in subsection (b), this act
30 applies to electronic records and
electronic signatures relating to a
31 transaction.
32 (b) This act does
not apply to a transaction to the extent it is governed
33 by:
34 (1) A law
governing the creation and execution of wills, codicils or
35 testamentary trusts; and
36 (2) the uniform
commercial code, other than K.S.A. 84-1-107 and 84-
37 1-206 and articles 2 and 2a of chapter 84
of the Kansas Statutes Anno-
38 tated, and amendments thereto.
39 (c) This act
applies to an electronic record or electronic signature
40 otherwise excluded from the application of
this act under subsection (b)
41 to the extent it is governed by a law other
than those specified in subsec-
42 tion (b).
43 (d) A transaction
subject to this act is also subject to other applicable
3
1 substantive law.
2 Sec.
4. This act applies to any electronic record or electronic
signa-
3 ture created, generated, sent,
communicated, received or stored on or
4 after the effective date of this
act.
5 Sec.
5. (a) This act does not require a record or signature to be
cre-
6 ated, generated, sent, communicated,
received, stored or otherwise proc-
7 essed or used by electronic means or
in electronic form.
8 (b) This
act applies only to transactions between parties each of which
9 has agreed to conduct transactions by
electronic means. Whether the
10 parties agree to conduct a transaction by
electronic means is determined
11 from the context and surrounding
circumstances, including the parties'
12 conduct.
13 (c) A party that
agrees to conduct a transaction by electronic means
14 may refuse to conduct other transactions by
electronic means. The right
15 granted by this subsection may not be
waived by agreement.
16 (d) Except as
otherwise provided in this act, the effect of any of its
17 provisions may be varied by agreement. The
presence in certain provi-
18 sions of this act of the words ``unless
otherwise agreed'', or words of
19 similar import, does not imply that the
effect of other provisions may not
20 be varied by agreement.
21 (e) Whether an
electronic record or electronic signature has legal
22 consequences is determined by this act and
other applicable law.
23 Sec.
6. This act must be construed and applied:
24 (a) To facilitate
electronic transactions consistent with other appli-
25 cable law;
26 (b) to be
consistent with reasonable practices concerning electronic
27 transactions and with the continued
expansion of those practices; and
28 (c) to effectuate
its general purpose to make uniform the law with
29 respect to the subject of this act among
states enacting it.
30 Sec. 7. (a)
A record or signature may not be denied legal effect or
31 enforceability solely because it is in
electronic form.
32 (b) A contract
may not be denied legal effect or enforceability solely
33 because an electronic record was used in
its formation.
34 (c) If a law
requires a record to be in writing, an electronic record
35 satisfies the law.
36 (d) If a law
requires a signature, an electronic signature satisfies the
37 law.
38 Sec. 8. (a)
If parties have agreed to conduct a transaction by elec-
39 tronic means and a law requires a person to
provide, send or deliver
40 information in writing to another person,
the requirements is satisfied if
41 the information is provided, sent or
delivered, as the case may be, in an
42 electronic record capable of retention by
the recipient at the time of
43 receipt. An electronic record is not
capable of retention by the recipient
4
1 if the sender or its information
processing system inhibits the ability of
2 the recipient to print or store the
electronic record.
3 (b) If a
law other than this act requires a record (1) to be posted or
4 displayed in a certain manner, (2) to
be sent, communicated or transmit-
5 ted by a specified method, or (3) to
contain information that is formatted
6 in a certain manner, the following
rules apply:
7 (A) The
record must be posted or displayed in the manner specified
8 in the other law.
9 (B) Except
as otherwise provided in subsection (d)(2), the record
10 must be sent, communicated or transmitted
by the method specified in
11 the other law.
12 (C) The record
must contain the information formatted in the man-
13 ner specified in the other law.
14 (c) If a sender
inhibits the ability of a recipient to store or print an
15 electronic record, the electronic record is
not enforceable against the
16 recipient.
17 (d) The
requirements of this section may not be varied by agreement,
18 but:
19 (1) To the extent
a law other than this act requires information to be
20 provided, sent or delivered in writing but
permits that requirement to be
21 varied by agreement, the requirement under
subsection (a) that the in-
22 formation be in the form of an electronic
record capable of retention also
23 may be varied by agreement; and
24 (2) a requirement
under a law other than this act to send, commu-
25 nicate or transmit a record by first-class
mail, may be varied by agreement
26 to the extent permitted by the other
law.
27 Sec. 9. (a)
An electronic record or electronic signature is attributable
28 to a person if it was the act of the
person. The act of the person may be
29 shown in any manner, including a showing of
the efficacy of any security
30 procedure applied to determine the person
to which the electronic record
31 or electronic signature was
attributable.
32 (b) The effect of
an electronic record or electronic signature attrib-
33 uted to a person under subsection (a) is
determined from the context and
34 surrounding circumstances at the time of
its creation, execution or adop-
35 tion, including the parties' agreement, if
any, and otherwise as provided
36 by law.
37 Sec. 10. If
a change or error in an electronic record occurs in a trans-
38 mission between parties to a transaction,
the following rules apply:
39 (a) If the
parties have agreed to use a security procedure to detect
40 changes or errors and one party has
conformed to the procedure, but the
41 other party has not, and the nonconforming
party would have detected
42 the change or error had that party also
conformed, the conforming party
43 may avoid the effect of the changed or
erroneous electronic record.
5
1 (b) In an
automated transaction involving an individual, the individual
2 may avoid the effect of an electronic
record that resulted from an error
3 made by the individual in dealing
with the electronic agent of another
4 person if the electronic agent did
not provide an opportunity for the
5 prevention or correction of the error
and, at the time the individual learns
6 of the error, the individual:
7
(1) Promptly notifies the other person of the error and that
the in-
8 dividual did not intend to be bound
by the electronic record received by
9 the other person;
10 (2) takes
reasonable steps, including steps that conform to the other
11 person's reasonable instruction, to return
to the other person or, if in-
12 structed by the other person, to destroy
the consideration received, if any,
13 as a result of the erroneous electronic
record; and
14 (3) has not used
or received any benefit or value from the consider-
15 ation, if any, received from the other
person.
16 (c) If neither
paragraph (a) nor paragraph (b) applies, the change or
17 error has the effect provided by other law,
including the law of mistake,
18 and the parties' contract, if any.
19 (d) Paragraphs
(b) and (c) may not be varied by agreement.
20 Sec. 11. If
a law requires a signature or record to be notarized, ac-
21 knowledged, verified or made under oath,
the requirement is satisfied if
22 the electronic signature of the person
authorized to perform those acts,
23 together with all other information
required to be included by other ap-
24 plicable law, is attached to or logically
associated with the signature or
25 record.
26 Sec.
12. (a) If a law requires that a record be retained, the
require-
27 ment is satisfied by retaining an
electronic record of the information in
28 the record which:
29 (1) Accurately
reflects the information set forth in the record after it
30 was first generated in its final form as an
electronic record or otherwise;
31 and
32 (2) remains
accessible for later reference.
33 (b) A requirement
to retain a record in accordance with subsection
34 (a) does not apply to any information the
sole purpose of which is to
35 enable the record to be sent, communicated
or received.
36 (c) A person may
satisfy subsection (a) by using the services of an-
37 other person if the requirements of that
subsection are satisfied.
38 (d) If a law
requires a record to be presented or retained in its original
39 form, or provides consequences if the
record is not presented or retained
40 in its original form, that law is satisfied
by an electronic record retained
41 in accordance with subsection (a).
42 (e) If a law
requires retention of a check, that requirement is satisfied
43 by retention of an electronic record of the
information on the front and
6
1 back of the check in accordance with
subsection (a).
2 (f) A
record retained as an electronic record in accordance with sub-
3 section (a) satisfies a law requiring
a person to retain a record for eviden-
4 tiary, audit or like purposes, unless
a law enacted after the effective date
5 of this act specifically prohibits
the use of an electronic record for the
6 specified purpose.
7 (g) This
section does not preclude a governmental agency of this state
8 from specifying additional
requirements for the retention of a record
9 subject to the agency's
jurisdiction.
10 Sec. 13. In
a proceeding, evidence of a record or signature may not
11 be excluded solely because it is in
electronic form.
12 Sec. 14. In
an automated transaction, the following rules apply:
13 (a) A contract
may be formed by the interaction of electronic agents
14 of the parties, even if no individual was
aware of or reviewed the elec-
15 tronic agents' actions or the resulting
terms and agreements.
16 (b) A contract
may be formed by the interaction of an electronic agent
17 and an individual, acting on the
individual's own behalf or for another
18 person, including by an interaction in
which the individual performs ac-
19 tions that the individual is free to refuse
to perform and which the indi-
20 vidual knows or has reason to know will
cause the electronic agent to
21 complete the transaction or
performance.
22 (c) The terms of
the contract are determined by the substantive law
23 applicable to it.
24 Sec.
15. (a) Unless otherwise agreed between the sender and the
25 recipient, an electronic record is sent
when it:
26 (1) Is addressed
properly or otherwise directed properly to an infor-
27 mation processing system that the recipient
has designated or uses for
28 the purpose of receiving electronic records
or information of the type
29 sent and from which the recipient is able
to retrieve the electronic record;
30 (2) is in a form
capable of being processed by that system; and
31 (3) enters an
information processing system outside the control of
32 the sender or of a person that sent the
electronic record on behalf of the
33 sender or enters a region of the
information processing system designated
34 or used by the recipient which is under the
control of the recipient.
35 (b) Unless
otherwise agreed between a sender and the recipient, an
36 electronic record is received when:
37 (1) It enters an
information processing system that the recipient has
38 designated or uses for the purpose of
receiving electronic records or in-
39 formation of the type sent and from which
the recipient is able to retrieve
40 the electronic record; and
41 (2) it is in a
form capable of being processed by that system.
42 (c) Subsection
(b) applies even if the place the information processing
43 system is located is different from the
place the electronic record is
7
1 deemed to be received under
subsection (d).
2 (d) Unless
otherwise expressly provided in the electronic record or
3 agreed between the sender and the
recipient, an electronic record is
4 deemed to be sent from the sender's
place of business and to be received
5 at the recipient's place of business.
For purposes of this subsection, the
6 following rules apply:
7 (1) If the
sender or recipient has more than one place of business,
8 the place of business of that person
is the place having the closest rela-
9 tionship to the underlying
transaction.
10 (2) If the sender
or the recipient does not have a place of business,
11 the place of business is the sender's or
recipient's residence, as the case
12 may be.
13 (e) An electronic
record is received under subsection (b) even if no
14 individual is aware of its receipt.
15 (f) Receipt of an
electronic acknowledgment from an information
16 processing system described in subsection
(b) establishes that a record
17 was received but, by itself, does not
establish that the content sent cor-
18 responds to the content received.
19 (g) If a person
is aware that an electronic record purportedly sent
20 under subsection (a), or purportedly
received under subsection (b), was
21 not actually sent or received, the legal
effect of the sending or receipt is
22 determined by other applicable law. Except
to the extent permitted by
23 the other law, the requirements of this
subsection may not be varied by
24 agreement.
25 Sec.
16. (a) In this section, ``transferable record'' means an
electronic
26 record that:
27 (1) Would be a
note under article 3 of chapter 84 of the Kansas
28 Statutes Annotated, and amendments thereto
or a document under article
29 7 of chapter 84 of the Kansas Statutes
Annotated, and amendments
30 thereto if the electronic record were in
writing; and
31 (2) the issuer of
the electronic record expressly has agreed is a trans-
32 ferable record.
33 (b) A person has
control of a transferable record if a system employed
34 for evidencing the transfer of interests in
the transferable record reliably
35 establishes that person as the person to
which the transferable record was
36 issued or transferred.
37 (c) A system
satisfies subsection (b), and a person is deemed to have
38 control of a transferable record, if the
transferable record is created,
39 stored and assigned in such a manner
that:
40 (1) A single
authoritative copy of the transferable record exists which
41 is unique, identifiable, and, except as
otherwise provided in paragraphs
42 (4), (5) and (6), unalterable;
43 (2) the
authoritative copy identifies the person asserting control as:
8
1 (A) The
person to which the transferable record was issued; or
2 (B) if the
authoritative copy indicates that the transferable record has
3 been transferred, the person to which
the transferable record was most
4 recently transferred;
5 (3) the
authoritative copy is communicated to and maintained by the
6 person asserting control or its
designated custodian;
7 (4) copies
or revisions that add or change an identified assignee of
8 the authoritative copy can be made
only with the consent of the person
9 asserting control;
10 (5) each copy of
the authoritative copy and any copy of a copy is
11 readily identifiable as a copy that is not
the authoritative copy; and
12 (6) any revision
of the authoritative copy is readily identifiable as au-
13 thorized or unauthorized.
14 (d) Except as
otherwise agreed, a person having control of a trans-
15 ferable record is the holder, as defined in
K.S.A. 84-1-201(20), and
16 amendments thereto, of the transferable
record and has the same rights
17 and defenses as a holder of an equivalent
record or writing under the
18 uniform commercial code, including, if the
applicable statutory require-
19 ments under K.S.A. 84-3-302(a), 84-7-501,
or 84-9-308, and amendments
20 thereto are satisfied, the rights and
defenses of a holder in due course, a
21 holder to which a negotiable document of
title has been duly negotiated,
22 or a purchaser, respectively. Delivery,
possession, and indorsement are
23 not required to obtain or exercise any of
the rights under this subsection.
24 (e) Except as
otherwise agreed, an obligor under a transferable rec-
25 ord has the same rights and defenses as an
equivalent obligor under equiv-
26 alent records or writings under the uniform
commercial code.
27 (f) If requested
by a person against which enforcement is sought, the
28 person seeking to enforce the transferable
record shall provide reasonable
29 proof that the person is in control of the
transferable record. Proof may
30 include access to the authoritative copy of
the transferable record and
31 related business records sufficient to
review the terms of the transferable
32 record and to establish the identity of the
person having control of the
33 transferable record.
34 Sec.
17. The secretary of administration shall determine
whether,
35 and the extent to which,
governmental agencies will create and retain
36 electronic records and convert
written records to electronic records.
37 Sec.
18. (a) Except as otherwise provided in subsection (f) of
section
38 12, and amendments thereto, the
secretary of administration shall deter-
39 mine whether, and the extent to
which, a governmental agency will send
40 and accept electronic records and
electronic signatures to and from other
41 persons and otherwise create,
generate, communicate, store, process, use
42 and rely upon electronic records
and electronic signatures.
43 (b) To
the extent that a governmental agency uses electronic
records
9
1 and electronic signatures
under subsection (a), the secretary, giving due
2 consideration to security,
may specify:
3
(1) The manner and format in which the electronic records must
be
4 created, generated, sent,
communicated, received and stored and the sys-
5 tems established for those
purposes;
6
(2) if electronic records must be signed by electronic means,
the type
7 of electronic signature
required, the manner and format in which the
8 electronic signature must be
affixed to the electronic record, and the
9 identity of, or criteria that
must be met by, any third party used by a
10 person filing a document to
facilitate the process;
11
(3) control processes and procedures as appropriate to ensure
ade-
12 quate preservation, disposition,
integrity, security, confidentiality and au-
13 ditability of electronic records;
and
14 (4) any
other required attributes for electronic records which
are
15 specified for corresponding
nonelectronic records or reasonably neces-
16 sary under the
circumstances.
17
(c) Except as otherwise provided in subsection (f) of section
12, and
18 amendments thereto, this act does
not require a governmental agency of
19 this state to use or permit the use
of electronic records or electronic
20 signatures.
21 Sec.
19. The secretary of administration who adopts standards
pur-
22 suant to section 18 and amendments
thereto may encourage and promote
23 consistency and interoperability
with similar requirements adopted by
24 other governmental agencies of this
and other states and the federal gov-
25 ernment and nongovernmental persons
interacting with governmental
26 agencies of this state. If
appropriate, those standards may specify differing
27 levels of standards from which
governmental agencies of this state may
28 choose in implementing the most
appropriate standard for a particular
29 application.
30 Sec.
20. 17. If any provision of
this act or its application to any person
31 or circumstance is held invalid, the
invalidity does not affect other pro-
32 visions or applications of this act which
can be given effect without the
33 invalid provision or application, and to
this end the provisions of this act
34 are severable.
35 Sec. 21.
18. K.S.A. 1999 Supp. 60-2616 is hereby
repealed.
36 Sec. 22.
19. This act shall take effect and be in force
from and after
37 its publication in the statute book.