WASHINGTON - President Clinton has signed digital signature legislation that would make contracts signed online as legally binding as paper contracts. It would also let lenders send mortgage and other disclosures mandated by consumer-protection laws electronically instead of on paper.

"Companies will have the legal certainty they need to invest and expand in electronic commerce," President Clinton said Friday after signing the legislation in a ceremony at Congress Hall in Philadelphia. "Eventually, vast warehouses of paper will be replaced by servers about the size of VCRs.

"Customers will soon enjoy a whole new universe of online services. With the swipe of a smart card and the click of a mouse, they will be able to finalize mortgages, sign insurance contracts, or open brokerage accounts."

Ironically, the President had to sign the bill with a regular pen, because the legislation addresses the signing of contracts but not laws. To demonstrate the technology, however, the President also signed it electronically afterward by using a card that had his digital John Hancock encoded on it.

Digital signatures become legal on Oct. 1, but provisions for electronic disclosures and records do not take effect until next year.

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