Cheirographon: Examining 2,000 Years of Signatures and Contracts
Legal Framework Series
Clear legal documentation is critical to ensure participants have clarity over the functioning of the blockchain network”
— WEF, Redesinging Trust: Blockchain Toolkit, p 185
Digital signatures use a standard, accepted format, called Public Key Infrastructure (PKI), to provide the highest levels of security and universal acceptance. They are a specific signature technology implementation of electronic signatures, and jurisdictions do make a difference in the enforceability of a contract based upon those requirements. Jurisdictions like Brazil and Russia have their own national PKI infrastructure for digital signatures, meaning you must use that PKI in order to maintain a digital signature for enforceable contracts.
We will examine what constitutes an enforceable digital signature in relation to the law. We want to make a distinction between Statutory law, that is laws that have been passed by a legislative body or plebiscite, and Consuetudinary Law or law that is by custom accepted.
In the context of the Freight Trust Network, we first examine the rulebook, which is the foundation upon which network interaction is based upon. The rulebook is made up of three distinct types of rules. These rules are classified as:
- rules of recognition,
- rules of change
- rules of adjudication.
We also establish that:
Network participants must obey these primary rules of obligation
Network operators must accept the secondary rules of recognition, change, and adjudication as standards of official conduct and network finality. (Hart 1954)
Historical Context of Signatures and Debt
Examining the bible, we can go to the ancient Greek words found in the bible and find in Strong’s dictionary a unique word called, “Cheirographon”. Cheirographon then described a note or bond written by hand thus obligating the writer to fulfill the debt that is written out. In other words, it is analogous to an “IOU” signed by hand and obligating the signer to repay the debt.
The phrase “handwriting of requirements” is translated from the Greek phrase cheirographon tois dogmasin. Cheirographon means anything written by hand, but can more specifically apply to a legal document, bond, or note of debt. — Bible Tools on Antinomianism
We explain this word because its important to understand how custom arises and persists. The act, or more specifically the international application of one's person to a signature, is the mechanism that typically guides legislators, representatives, and judicial systems in establishing what constitutes a legal signature.
Below we go through some case law and examine to what extent digital signatures are legal, and not legal. This is important because as a validator on the network, there are some instances in which one could be seen as “enabling” a transaction. For example, if we were transmitting money from Iran to Russia and operating within the United States that would be illegal. However, does that apply to someone who is transacting on the network while you just provide services to the network? Should a validator also be presumed to be “enabling” that transaction, even though they are simply providing a service to the network, much like how in proof of work chains a miner is not held for enabling money laundering or sanctions evasion?
Intent and Digital Signatures
For example, in Parma Tile Mosaic & Marble Co., Inc. v. Estate of Short, the New York Court of Appeals held that an automatic fax machine heading
printed on a document did not satisfy the statute of frauds signature requirement (87 N.Y.2d 524 (N.Y. 1996)). The court held that under the statute of frauds, a valid signature requires an intentional act to authenticate the writing.
New York has enacted the Electronic Signatures and Records Act (ESRA), which recognizes that an electronic signature has the same validity and
effect as a handwritten signature (N.Y. State Tech. § 304).
The ESRA defines an electronic signature the same way the UETA defines it (N.Y. State Tech. § 302(3); see also Uniform Electronic Transactions Act
Definition of Electronic Signature).
Similar to the UETA, the ESRA applies only to certain transactions. The ESRA generally does not apply to:
- laws relating to wills, trusts, powers of attorney, or health care proxies; and
- negotiable instruments and other instruments of the title where possession of the instrument confers title, like bills of lading.
So even in the United States, we see that not all States (looking at you Louisiana) practice the same standard of what is and is not acceptable. We will ignore the fact that not all digital signatures are “digital signatures”. The European Union makes a distinction between Electronic Signatures and Digital Signatures. Electronic signatures are different than digital signatures in the sense that digital signatures are considered “legally equivalent” to a handwritten signature.
We want to also note though however, that interstate commerce clause overrides the ESRA as it pertains to shipping documents, as Federal law states only the carrier needs to sign the document. This is a perfect example of customary law, in practice, a shipper always signs the bill of lading as well, even though it is not legally required to.
Signatures and Enforceability
How legislators and courts have defined what constitutes a valid signature in compliance with the statute of frauds and addresses the contractual enforceability of digital signatures.
The Uniform Commercial Code.
Every state has adopted a version of the Uniform Commercial Code (UCC), which contains a statute of frauds
covering security agreements and the sale of goods, personal property, and securities.
The Uniform Electronic Transactions Act.
A majority of states have adopted the Uniform Electronic Transactions Act (UETA) and have given legal effect to electronic and digital signatures in certain transactions.
Alternatives to the UETA.
The minority of states that have not adopted the UETA have enacted other statutes that protect the enforceability of electronic or digital signatures.
The Federal Electronic Signatures in Global and National Commerce Act. This federal legislation protects the enforceability of electronic
signatures used in transactions that are in or affect interstate or foreign commerce.
Citations and References
Cooter, Robert D., and Ginsburg, Tom, Leximetrics: Why the Same Laws are Longer in Some Countries than Others (June 2003). U Illinois Law & Economics Research Paper No. LE03–012. Available at SSRN: https://ssrn.com/abstract=456520 or http://dx.doi.org/10.2139/ssrn.456520
Buchanan, John, and Chai, Dominic H. and Deakin, Simon F., Empirical Analysis of Legal Institutions and Institutional Change: Multiple-Methods Approaches and Their Application to Corporate Governance Research (February 1, 2014). European Corporate Governance Institute (ECGI) — Law Working Paper №238/2014; University of Cambridge Faculty of Law Research Paper №12/2014. Available at SSRN: https://ssrn.com/abstract=2394681 or http://dx.doi.org/10.2139/ssrn.2394681
La Porta, Rafael, and Lopez de Silanes, Florencio and Shleifer, Andrei, The Economic Consequences of Legal Origins. Journal of Economic Literature, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1028081
2013, “Some Reflections on the Ideal Dimension of Law and on the Legal Philosophy of John Finnis”, American Journal of Jurisprudence,
Ibid., p. 116.
Dworkin, Ronald. Law’s Empire. Cambridge: Harvard University Press, 1986.
Hart, H.L.A. The Concept of Law. Oxford: Clarendon Press, 1994.
