Electronic Commercial Documents
It is possible for negotiable documents to be processed electronically. Currently, this is largely done within secure EDI systems operating among regular trading partners who previously agreed to use electronic commercial documents. However, as UETA is proven reliable, electronic commercial documents will migrate from EDI into more general practice. Theoretically, documents need not physically accompany the goods in transit. Indeed, it is impossible for printed documents to physically accompany electronic deliveries of information or software. Instead, various electronic methods may cause electronic documents to arrive right before or soon after the goods arrive. They could directly accompany electronic delivery of information or software. For example, documents showing indorsements can be transferred by fax machine, scanned for attachment to e-mail messages, downloaded from a secure website or sent via EDI.
An original document is first prepared, perhaps by word processor in ASCII characters or by a web page development tool using the HTML web markup language.
Perhaps a more suitable and emerging new language is XML , extensible markup language. XML is broader than HTML, it permits the use of graphics for diagrams and designers can construct forms for easy and accurate data storage and retrieval.
Alternatively, the document can be printed for faxing, an electronic version can be transmitted via computerized facsimile, sent as an e-mail attachment or up/downloaded through a secure website. As the electronic document is transmitted electronically, all necessary intermediaries can apply their indorsements. Indorsements can be written signatures made either on the original or on a copy printed from the electronic version or made using some other acceptable electronic signature technology (e.g., encryption).
Further indorsement and transfer can be made physically or by another electronic conversion using the same or different technique such as fax, e-mail, scanning, web access or future developed electronic or digital communication method. As UETA and the Federal E-Sign law are expanded to cover more types of commercial documents, indorsements may alternatively be made using electronic signatures on electronic records.
As of this writing, neither UETA nor the federal E-Sign law applies to checks, notes, drafts or letters of credit. The banking industry has reliable systems and may want to await the proven security of newer systems. However, experiences with EDI and the

electronic negotiation of real estate promissory notes should eventually demonstrate a workable model for electronic negotiable instruments of all types. As the banking system becomes able to reliably process electronic checks, simple changes in the UETA and E-
Sign exceptions for electronic transferable documents may expand their use. Chapter 10 introduced UETA’s approach to electronic commercial documents.
Under UETA §16 and the federal E-Sign law, electronic transferable records can be used as negotiable documents if the parties expressly agree to use them. However, for now, UETA permits the use of electronic transferable records only for real estate promissory notes and documents of title. The mortgage industry appears ready to reduced the paperwork expenses of negotiable documents, The federal E-Sign law is even more restrictive, it permits electronic transferable records only for real estate promissory notes.
By permitting electronic promissory notes for real estate loans, UETA and E-Sign facilitate cost savings for the secondary mortgage industry. All the federal E-Sign exceptions will be reviewed by 2003 and some exceptions may then be removed by
Congress or by federal regulators. The states might also expand coverage to other types of commercial paper.
Just like their paper counterparts, transferable records must be created, transferred and stored under secure conditions that permit only one party to control or possess them at a time. Absent forgery in the paper world, when a negotiable instrument is transferred it is no longer held by the transferor, only by the transferee. There are significant technological difficulties to overcome before many computer systems could be sufficiently reliable and secure to assure such exclusive control over transferable records.
For example, after an electronic transfer, the sending system must be prevented from having any control over the record and the recipient must have exclusive control. Some possible combination of security methods is needed, including encryption, physical access controls, and/or third parties that record every transfer. Indorsement could be approved or made by humans who review each transaction by computer. Alternatively, the electronic agent provisions of UETA and E-Sign are intended to permit cost savings with computerized transaction processing and indorsement using electronic agents.
Just like many citizens, some courts are suspicious of the validity of electronic documents. Electronic commercial documents must have enough security to build

confidence that the system is not prone to alteration, forgery or other fraud. The judge’s language in the following case rather bluntly illustrates that proof of key commercial concepts, such as title, require reliable evidence and the Internet may have a long way to go before it builds confidence among many people that it is accurate.
St.Clair v. Johnny’s Oyster & Shrimp, Inc.
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Facts: Teddy St. Clair was injured while working as a seaman for Johnny’s Oyster &
Shrimp, Inc. aboard the vessel CAPT. LE’BRADO. Teddy St. Clair sued Johnny’s Oyster
& Shrimp, Inc. for personal injury compensation and his employer filed a Motion to
Dismiss the claim, arguing it was not responsible for the injuries because it did not own the vessel CAPT. LE’BRADO. Teddy St. Clair offered proof of ownership retrieved from the Internet.
Legal Question: Is information obtained off the Internet sufficient to prove title to a vessel? NO .
Rationale: KENT, Judge. motion to dismiss should be granted only when it appears without a doubt that the plaintiff can prove no set of facts in support of her claims that would entitle her to relief. Defendant alleges that it does not now, and did not at the time the alleged incident, own or operate the vessel CAPT. LE’BRADO. Defendant notes that on July 1, 1999 ownership was transferred to Oysters R Us, Inc. and on August
1, 1999, Oysters R Us, Inc. transferred ownership of the vessel to Shrimps R Us, Inc.
Plaintiff responds that he has discovered “evidence” –taken off the Worldwide Web on
December 1, 1999—revealing that Defendant does “in fact” own CAPT. LE’BRADO.
Plaintiff’s electronic “evidence” is totally insufficient to withstand Defendant’s
Motion to Dismiss. While some look to the Internet as an innovative vehicle for communication, the Court continues to warily and wearily view it largely as one large catalyst for rumor, innuendo, and misinformation. So as not to mince words, the court reiterates that this so-called Web provides no way of verifying the authenticity of the alleged contentions that Plaintiff wishes to rely. There is no way that Plaintiff can overcome the presumption that the information he discovered on the Internet is inherently untrustworthy. Anyone can put anything on the Internet. No web-site is monitored for accuracy and nothing contained therein is under oath or even subject to independent
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St.Clair v. Johnny’s Oyster & Shrimp, Inc.
, 76 F.Supp.2d 773 (S.D.Tx.1999).

verification absent underlying documentation. Moreover, the Court holds no illusions that hackers can adulterate the content on any web-site from any location at any time. For these reasons, any evidence procured off the Internet is adequate for almost nothing.
Instead of relying on the voodoo information taken from the Internet, Plaintiff must hunt for hard copy back-up documentation in admissible form from the United
States Coast Guard or discover alternative information verifying what Plaintiff alleges.
Case Questions:
1.
What if web-sites were regularly archived by third parties. Could it be used to prove the timing and accuracy of web-site content? How might that change this judge’s rationale about the accuracy of web content?
2. Many disputes about information posted on the Internet may not require proof of the truth stated in the posted material; in this case that would be accuracy of ownership to the boat in this case. Instead, in many other situations it is useful simply to prove the material was posted. In what situations might evidence of mere posting satisfy courtroom evidentiary requirements and prove key facts?