CHAPTER 120 SENATE Substitute for HOUSE BILL No. 2879 An Act concerning electronic transactions; enacting the uniform electronic transactions act;
repealing K.S.A. 1999 Supp. 60-2616. Be it enacted by the Legislature of the State of Kansas:

      Section  1. This act shall be known and may be cited as the uniform
electronic transactions act.

      Sec.  2. In this act:

      (a) ``Agreement'' means the bargain of the parties in fact, as found in
their language or inferred from other circumstances and from rules, reg-
ulations, and procedures given the effect of agreements under laws oth-
erwise applicable to a particular transaction.

      (b) ``Automated transaction'' means a transaction conducted or per-
formed, 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.

      (c) ``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.

      (d) ``Contract'' means the total legal obligation resulting from the par-
ties' agreement as affected by this act and other applicable law.

      (e) ``Digital signature'' means a type of electronic signature consisting
of a transformation of an electronic message using an asymmetric crypto
system such that a person having the initial message and the signer's
public key can accurately determine whether:

      (1) The transformation was created using the private key that corre-
sponds to the signer's public key; and

      (2) the initial message has not been altered since the transformation
was made.

      (f) ``Electronic'' means relating to technology having electrical, digi-
tal, magnetic, wireless, optical, electromagnetic or similar capabilities.

      (g) ``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.

      (h) ``Electronic record'' means a record created, generated, sent,
communicated, received or stored by electronic means.

      (i) ``Electronic signature'' means an electronic sound, symbol or pro-
cess attached to or logically associated with a record and executed or
adopted by a person with the intent to sign the record.

      (j) ``Governmental agency'' means an executive, legislative, or judicial
agency, department, board, commission, authority, institution or instru-
mentality of the federal government or of a state or of a county, munic-
ipality or other political subdivision of a state.

      (k) ``Information'' means data, text, images, sounds, codes, computer
programs, software, databases or the like.

      (l) ``Information processing system'' means an electronic system for
creating, generating, sending, receiving, storing, displaying or processing
information.

      (m) ``Message'' means a digital representation of information.

      (n) ``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.

      (o) ``Record'' means information that is inscribed on a tangible me-
dium or that is stored in an electronic or other medium and is retrievable
in perceivable form.

      (p) ``Registered certification authority'' means a person providing cer-
tification of a digital signature who is, or is certified by, a member of the
group of certification authorities approved by and registered with the
secretary.

      (q) ``Secretary'' means the Kansas secretary of state.

      (r) ``Security procedure'' means a procedure employed for the pur-
pose of verifying that an electronic signature, record or performance is
that of a specific person or for detecting changes or errors in the infor-
mation in an electronic record. The term includes a procedure that re-
quires the use of algorithms or other codes, identifying words or numbers,
encryption, callback or other acknowledgment procedures.

      (s) ``State'' means a state of the United States, the District of Colum-
bia, Puerto Rico, the United States Virgin Islands or any territory or in-
sular possession subject to the jurisdiction of the United States.

      (t) ``Transaction'' means an action or set of actions occurring between
two or more persons relating to the conduct of business, insurance, com-
mercial or governmental affairs.

      Sec.  3. (a) Except as otherwise provided in subsection (b), this act
applies to electronic records and electronic signatures relating to a trans-
action.

      (b) This act does not apply to a transaction to the extent it is governed
by:

      (1) A law governing the creation and execution of wills, codicils or
testamentary trusts; and

      (2) the uniform commercial code, other than K.S.A. 84-1-107 and 84-
1-206 and articles 2 and 2a of chapter 84 of the Kansas Statutes Anno-
tated, and amendments thereto.

      (c) This act applies to an electronic record or electronic signature
otherwise excluded from the application of this act under subsection (b)
to the extent it is governed by a law other than those specified in subsec-
tion (b).

      (d) A transaction subject to this act is also subject to other applicable
substantive law.

      Sec.  4. This act applies to any electronic record or electronic signa-
ture created, generated, sent, communicated, received or stored on or
after the effective date of this act.

      Sec.  5. (a) This act does not require a record or signature to be cre-
ated, generated, sent, communicated, received, stored or otherwise proc-
essed or used by electronic means or in electronic form.

      (b) This act 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 subsection may not be waived by agreement.

      (d) Except as otherwise provided in this act, the effect of any of its
provisions may be varied by agreement. The presence in certain provi-
sions of this act 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 act and other applicable law.

      (f) This act does not require any person to use or permit the use of
electronic or digital signatures.

      (g) Any state agency may adopt rules and regulations governing the
agency's use of digital signatures as long as the rules and regulations meet
or exceed those adopted by the secretary.

      Sec.  6. This act must be construed and applied:

      (a) To facilitate electronic transactions consistent with other appli-
cable law;

      (b) to be consistent with reasonable practices concerning electronic
transactions and with the continued expansion of those practices; and

      (c) to effectuate its general purpose to make uniform the law with
respect to the subject of this act among states enacting it.

      Sec.  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.

      Sec.  8. (a) If parties have agreed to conduct a transaction by elec-
tronic means and a law requires a person to provide, send or deliver
information in writing to another person, the requirements 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 act requires a record (1) to be posted or
displayed in a certain manner, (2) to be sent, communicated or transmit-
ted by a specified method, or (3) to contain information that is formatted
in a certain manner, the following rules apply:

      (A) The record must be posted or displayed in the manner specified
in the other law.

      (B) Except as otherwise provided in subsection (d)(2), the record
must be sent, communicated or transmitted by the method specified in
the other law.

      (C) The record must contain the information formatted in the man-
ner 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,
but:

      (1) To the extent a law other than this act requires information to be
provided, sent or delivered in writing but permits that requirement to be
varied by agreement, the requirement under subsection (a) that the in-
formation be in the form of an electronic record capable of retention also
may be varied by agreement; and

      (2) a requirement under a law other than this act to send, commu-
nicate or transmit a record by first-class mail, may be varied by agreement
to the extent permitted by the other law.

      Sec.  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 attrib-
uted to a person under subsection (a) is determined from the context and
surrounding circumstances at the time of its creation, execution or adop-
tion, including the parties' agreement, if any, and otherwise as provided
by law.

      Sec.  10. If a change or error in an electronic record occurs in a trans-
mission between parties to a transaction, the following rules apply:

      (a) 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.

      (b) 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:

      (1) Promptly notifies the other person of the error and that the in-
dividual did not intend to be bound by the electronic record received by
the other person;

      (2) takes reasonable steps, including steps that conform to the other
person's reasonable instruction, to return to the other person or, if in-
structed by the other person, to destroy the consideration received, if any,
as a result of the erroneous electronic record; and

      (3) has not used or received any benefit or value from the consider-
ation, if any, received from the other person.

      (c) If neither paragraph (a) nor paragraph (b) applies, the change or
error has the effect provided by other law, including the law of mistake,
and the parties' contract, if any.

      (d) Subsections (b) and (c) may not be varied by agreement.

      Sec.  11. If a law requires a signature or record to be notarized, ac-
knowledged, 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 ap-
plicable law, is attached to or logically associated with the signature or
record.

      Sec.  12. (a) If a law requires that a record be retained, the require-
ment is satisfied by retaining an electronic record of the information in
the record which:

      (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;
and

      (2) remains accessible for later reference.

      (b) A requirement to retain a record in accordance with subsection
(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 subsection (a) by using the services of an-
other person if the requirements of that subsection 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 subsection (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 subsection (a).

      (f) A record retained as an electronic record in accordance with sub-
section (a) satisfies a law requiring a person to retain a record for eviden-
tiary, audit or like purposes, unless a law enacted after the effective date
of this act 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.

      Sec.  13. In a proceeding, evidence of a record or signature may not
be excluded solely because it is in electronic form.

      Sec. 14. In an automated transaction, the following rules apply:

      (a) A contract may be formed by the interaction of electronic agents
of the parties, even if no individual was aware of or reviewed the elec-
tronic agents' actions or the resulting terms and agreements.

      (b) 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 ac-
tions that the individual is free to refuse to perform and which the indi-
vidual knows or has reason to know will cause the electronic agent to
complete the transaction or performance.

      (c) The terms of the contract are determined by the substantive law
applicable to it.

      Sec.  15. (a) Unless otherwise agreed between the sender and the
recipient, an electronic record is sent when it:

      (1) Is addressed properly or otherwise directed properly to an infor-
mation 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) is in a form capable of being processed by that system; and

      (3) 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:

      (1) It enters an information processing system that the recipient has
designated or uses for the purpose of receiving electronic records or in-
formation of the type sent and from which the recipient is able to retrieve
the electronic record; and

      (2) it is in a form capable of being processed by that system.

      (c) Subsection (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 subsection (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 subsection, 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 rela-
tionship 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 subsection (b) even if no
individual is aware of its receipt.

      (f) Receipt of an electronic acknowledgment from an information
processing system described in subsection (b) establishes that a record
was received but, by itself, does not establish that the content sent cor-
responds to the content received.

      (g) If a person is aware that an electronic record purportedly sent
under subsection (a), or purportedly received under subsection (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 subsection may not be varied by
agreement.

      Sec.  16. (a) In this section, ``transferable record'' means an electronic
record that:

      (1) Would be a note under article 3 of chapter 84 of the Kansas
Statutes Annotated, and amendments thereto or a document under article
7 of chapter 84 of the Kansas Statutes Annotated, and amendments
thereto if the electronic record were in writing; and

      (2) the issuer of the electronic record expressly has agreed is a trans-
ferable 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 subsection (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:

      (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:

      (A) The person to which the transferable record was issued; or

      (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; and

      (6) any revision of the authoritative copy is readily identifiable as au-
thorized or unauthorized.

      (d) Except as otherwise agreed, a person having control of a trans-
ferable record is the holder, as defined in K.S.A. 84-1-201(20), and
amendments thereto, 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 require-
ments under K.S.A. 84-3-302(a), 84-7-501, or 84-9-308, and amendments
thereto 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 rec-
ord has the same rights and defenses as an equivalent obligor under equiv-
alent 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.

      Sec.  17. (a) Any person, before entering upon the duties of a regis-
tered certification authority, shall:

      (1) Register with the secretary on forms approved and provided by
the secretary;

      (2) pay to the secretary an annual filing fee of $1,000;

      (3) file with the secretary a good and sufficient surety bond, certifi-
cate of insurance or other evidence of financial security in the amount of
$100,000; and

      (4) be approved by the secretary as meeting the requirements of any
rules and regulations adopted by the secretary, as the secretary deter-
mines appropriate, to ensure the person's financial responsibility and con-
dition, character, qualifications and fitness to be a registered certification
authority.

      (b) A registered certification authority shall create, maintain and pre-
serve all records that are necessary to demonstrate compliance with rules
and regulations adopted by the secretary.

      (c) If any person who is approved and registered with the secretary
as a registered certification authority fails to maintain any of the qualifi-
cations listed in subsection (a) and (b) or otherwise required by rules and
regulations of the secretary, the person's registration shall be deemed
lapsed.

      (d) Any person who violates or fails to comply with this section and
any provision related to registered certification authority and the rules
and regulations of the secretary promulgated pursuant to section 18, and
amendments thereto, upon notice and hearing, shall be subject to a civil
penalty not to exceed $10,000 per failure or violation.

      Sec.  18. The secretary may adopt rules and regulations to implement
the provisions of sections 17 and 19, and amendments thereto, and related
provisions thereto.

      Sec.  19. The secretary shall have the authority to establish reciprocity
with other states and nations for purposes of sections 17 and 18, and
amendments thereto, and related provisions thereto.

      Sec.  20. If any provision of this act or its application to any person
or circumstance is held invalid, the invalidity does not affect other pro-
visions or applications of this act which can be given effect without the
invalid provision or application, and to this end the provisions of this act
are severable.

 Sec.  21. K.S.A. 1999 Supp. 60-2616 is hereby repealed.
 Sec.  22. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 19, 2000.
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