The Uniform Computer Information Transactions Act (UCITA) is a commercial code applied “to computer information transitions.” That is, the UCITA governs “agreement[s] … to create, modify, transfer or license… information in electronic form which is obtained from or through the use of a computer or which is in a form capable of being processed by a computer.” The types of transactions covered include access to online databases, computer programs, and data processing.
Information technology has become a major force in the American economy , and with this revolution in information comes a unique set of industry norms. So, while the Uniform Commercial Code (UCC) in general, and article 2 in particular, was a good fit for the industrial revolution, where physical goods were bought and sold, it is a poor fit for digital transactions, where information is bought and sold. Assuming laws are among the essential structures that shape future development, continued growth of e-commerce will depend on new laws tailored to these new realities.
Other uniform acts have sections that address e-commerce but the law is fragmented. Some of the more central issues to e-commerce, such as online tractions for information, are missing. Acts that include e-commerce sections include:
A subcommittee of the American Bar Association proposed that the National Conference of Commissioners on Uniform State Laws (NCCUSL) draft a uniform act covering computer information transactions. The NCCUSL have drafted a number of uniform acts and took on this project in conjunction with the American Law Institute (ALI). The drafters intended to supplement / revise the UCC with a new Article 2B, which would cover computer information transactions. But as drafting progressed, disputes among the drafters regarding the appropriately direction for Article 2B emerged. Consequently, NCCUSL proceeding alone, and what would have been UCC Article 2B, became the free standing UCITA. In light of its history, it is not surprising that the UCITA is consistent with the UCC and borrows many concepts from it. The UCITA was accepted by the NCCUSL in July of 1999, revised in 2000 and has proposed amendments pending. The UCITA has been enacted in Virginia and Maryland and is under consideration in several more states.
UCITA: An Overview
The UCITA (revised 2000) is in nine parts. The underlying theme of the UCITA is that contracts are freely negotiated among equals who act in their own best interest. The purpose of the UCITA is to fill in gaps somehow omitted by the parties contracting.
Part 1 – General Provisions
This first section of the act provides the general format. It provides definitions, some of which seem to vary from traditional legal convention , scope of the act, guidance on choice of law and forum selection. This section includes:
? Definitions
? Scope of the act
o Transactions included
? Data processing
? Access and Internet contracts
? Computer programs
? Digital multimedia works
o Transactions not include (covered by other law)
? Sales contracts
? Personal services contracts
? Employment contracts
? Financial services transactions
? Telecommunications services and products
? Choice of law
o States with choice of law rules govern.
o State with the most the significant relationship to
the transaction laws govern.
o Selected by the parties.
? Assent
o Knowledge of or an opportunity to review the contract.
o Assent given after review is accomplished.
? Terms that may not be contracted around:
o Good faith
o Diligence
o Reasonableness
o Care
? The parties to the contract can, however, determine
what standard is to be used to judge the above listed terms.
? Fundamental public policy issues and unconscionable
actions are non-waiverable.
Part 2 – Formation and Terms
The majority of terms in this section reflect conventional contract law. There is some acknowledgement of the difference to be found in e-commerce but the UCITA stresses what is familiar. The Act fails to distinguish itself and the online environment sufficiently enough to adequately meet online needs. This failing is reflected in much of the criticism of this section. Assent in online transactions comes with far less prior negotiating then in conventional contracts for goods and services. Highlights of this section are listed below.
? For a contract to be formed there must be an offer and
acceptance.
? Contracts can be formed via electronic agents.
? The mirror image rule is not enforced.
? Mass-market contract have limitations:
o Assent cannot occur without an opportunity to review.
o The terms may not be unconscionable.
o The terms of the contract may not alter any expressly
agreed to terms by the parties involved.
? Assent to a mass-market contract occurs after initial
use of information.
Part 3 – Construction
For the most part this section is traditional contract law. Of special interest is the restricts that can be placed on the number of user to computer information transactions. This appears to be an effort to re-affirm laws against pirating of software. However, many librarian associations have opposed this, among other UCITA sections, in light of the multiple users and fair use coping that takes place in their settings. Note highlights of this section are below.
? The contract is the best record of parties’ intent.
? Mass-market contract must meet standards of good faith
and reasonable notice. Consumers have the right to withdraw from future
performance if there is a material change in the contract and the withdrawal
is done in good faith.
? Contracts should be interpreted in light of commercial
context.
? Licenses should be interpreted in light of commercial
context.
? Licenses can specify number of users.
? When the contract does not specify duration, the duration
shall be for a reasonable time in light of subject and circumstances.
o Either party may terminate indefinite contracts at
will.
Part 4 – Warranties
A merchant may warrant information provided to the licensee. When the licensee is in a “special relationship with the merchant” and the merchant “collects, complies processes, provides or transmits informational content” a warranty runs as to the accuracy of the information. This type of relationship might arise between a bank and an online service that provides the online banking transactions of that bank's customers. This is a good example of the special needs created by the online commercial environment and how law could protect these needs. Note other highlights of this section below:
? Licensor warrants, no third party can claim infringements
of intellectual property rights.
? Advertising by licensor may create an express warranty.
? Implied warranty of merchantability applies to computer
information transactions.
? The licensor may include an implied warranty of merchantability
disclaimer.
Part 5 – Transfer of Interest and Rights
This section separates and defines the rights of information users as apart from the information creators. This is a critically important area of computer information / Intellectual Property law. However, the UCITA makes only very timid first step in defining this relationship. Nonetheless, they did take some first steps by trying to define the issue in cyber-relevant terms. Section highlights below:
? Ownership rights of a copy are distinguished from ownership
rights of the underlying intellectual property rights.
? Information rights transfer per state law.
? Title to a copy depends on license agreement.
Part 6 – Performance
A criticism of this section has been that software manufactures are allowed to market products with known defects, without informing the consumer and without penalty. The UCITA eliminates the perfect tender rule in most business tractions. Therefore, unless the defects rise to the level of a material breach, the business user has diminished ability to get the manufacture to address his needs. See highlights below.
? Parties have a duty to perform as contracted.
? Licenses may only have to authorize use of information.
? An inspection is limited to packaging.
o This limit was created because often when information
transactions occur, its value is bestowed upon viewing.
? If performance involves delivery of a copy:
o The receiving party must have an opportunity to inspect
the copy.
o The contracting parties determine inspection standards.
? Continuous access contracts must have information available
as contracted (system availability)
? Cure of breach
o Repair or replacement
o Maintenance services
Part 7 – Breach of Contract
This section follows UCC Article 2 very closely. The law follows predictable paths. Highlights of this section are below.
? Breach occurs when a party fails to conform to the contract.
? Contract terms can determine material breach.
? Waiver occurs by accepting non-conforming performance
in silence beyond a reasonable time.
? Refusal of a copy, when the contract calls for a copy
to be furnished, may or may not cancel the contract.
Part 8 – Remedies
This section allows a licensor under appropriate circumstances, such as cancellation or material breach, to engage in ”self-help.” That is, use an electronic means, such as an e-mail message, to disable software in a users possession. This can only occur given sufficient cause and where allowed by contract. The fear is what others can do with this access door to consumer’s systems, might this create a weakness in the security system. Further, this seems to place a lot of power and control in the hands of licensors at the expense of consumer. Highlights of this section are below:
? Parties are free to define remedies for breach.
? If the contract so permits, electronic measures can
be taken by the licensor to prevent use of its computer information upon
cancellation or martial breach. (That is, the software can be electronically
and remotely turned off).
o A 15-day notice must be given first.
o Damages are available for wrongful use.
o Prohibited in mass-market transactions.
? Common remedies include:
o Replace, repair, refund.
o No Cancellation clause.
? Liquidated damages as agreed to by the parties.
? A cause of action must be bought within four years
in most cases.
? Injured parties must make an effort to mitigate damages.
? The injured party selects the method for calculating
damages.
Part 9 – Miscellaneous Provisions
This section gives full acceptance to electronic
signature. Aside from that, this section is for administrative
purposes. Highlights below:
? Administrative procedures:
o Provides for repeals
o Provides for an effective date
? This act fully accepts electronic signatures
Advantages and Disadvantages of UCITA
The UCITA has become a very controversial act with a number of state’s Attorney Generals, library associations and intellectual property law experts. Yet, a number of legal scholars have noted several benefits of this act. These advantages include: standardizations, uniformity, and modernization of our laws. In contract, the disadvantages all involve consumer protections.
Advantages of UCITA
Because commercial contract laws are created by each state, this act promotes uniformity of laws. The national nature of e-commerce requires some degree of uniformity if this new form of commerce is to reach its potential. So, any efforts in this respect are helpful.
The UCITA provides a set of default rules. In so doing, legal standards are created. Online transactions / computer information has become so essential to commerce that legal expectations need to be established. The parties to these transactions need to the negotiation with the same set of expectation.
Finally, the UCITA modernizes the law. Online transactions are here to stay. The UCITA is forward looking. It takes note of the fundamental differences that exist between the sales of goods and transactions for information in cyberspace and attempts to address them.
Disadvantages of UCITA
On the other hand, UCITA’s underlying assumption of equal parties freely negotiating over contract terms is less true in cyber transactions then may be the case in transactions for goods. This incorrect assumption has led UCITA to give insufficient attention to the need for consumer protection. Not all consumers have enough sophistication to understand the implications of some of the terms written into contracts. As the world becomes more complex, the law must protect those less well suited to protect their interest. The UCITA needs to be slightly more regulatory and appreciate the power imbalance in online bargaining.
Conclusion
Overall, the UCITA is an important first step.
It is important that the UCITA continue past legal conventions. However,
this act may have better served online needs if it had not been created
as an extension of the UCC. This act fails to acknowledge the unequal
bargaining positions of those that enter into online contracts. Yet,
this act is progressive in its attempt to address an important area of
emerging law, online tractions. All things considered, the UCITA
is an important first step.
Fendell, Charles H. and Kennedy, Dennis M. “ UCITA Is Coming Part One: Practical Analysis for Licensee’s Counsel” The Computer Lawyer Vol. 17, Num 7, July 2000. Pg. 3.
UCITA § 103(a)
UCITA § 102, 103
UCITA § 103
Dively, Mary Jo; Ring, Carlyle C. “Overview of
Uniform Computer Information Transaction Act” eCommerce Strategies for
Success in the Digital Economy September 2000 pg. 115
Nimmer, Raymond T. “UCITA: A Commercial Contract
Code” The Computer Lawyer Vol. 17, Num. 5 May 2000. Pg, 3.
Ibid. Pg 3-4.
Ibid pg.4
Ibid
Ibid
Dively, Mary Jo; Ring, Carlyle C. “Overview of
Uniform Computer Information Transaction Act” eCommerce Strategies for
Success in the Digital Economy September 2000 pg. 117.
Ibid
Ibid
Ibid
Ibid
Ibid
Nimmer, Raymond T. “UCITA: A Commercial Contract
Code” The Computer Lawyer Vol. 17, Num. 5 May 2000. Pg, 4.
Dively, Mary Jo; Ring, Carlyle C. “Overview of
Uniform Computer Information Transaction Act” eCommerce Strategies for
Success in the Digital Economy September 2000 pg. 117-18.
Fendell, Charles H. and Kennedy, Dennis M. “ UCITA Is Coming Part One: Practical Analysis for Licensee’s Counsel” The Computer Lawyer Vol. 17, Num 7, July 2000. Pg. 3
Id
Op. Cite.
Kaner, Cem “Why You Should Oppose UCITA” The Computer
Lawyer Vol. 17 Num. 5 May 2000. Pg. 20.
Ibid.
Nimmer, Raymond T. “UCITA: A Commercial Contract
Code” The Computer Lawyer Vol. 17, Num. 5 May 2000. Pg, 4
Harrell, Alvin C. “UCITA: Opportunity or Obstruction?”
Oklahoma City University Law Review Vol 25. Pg. 333
Id.
UCITA
Dively, Mary Jo; Ring, Carlyle C. “Overview of
Uniform Computer Information Transaction Act” eCommerce Strategies for
Success in the Digital Economy September 2000 pg. 118-19
Nimmer, Raymond T. “UCITA: A Commercial
Contract Code” The Computer Lawyer Vol. 17, Num. 5 May 2000. Pg, 5
Fendell, Charles H. and Kennedy, Dennis
M. “ UCITA Is Coming Part One: Practical Analysis for Licensee’s Counsel”
The Computer Lawyer Vol. 17, Num 7, July 2000. Pg. 4
UCITA § 102
UCITA § 103
UCITA § 109
UCITA § 113
UCITA § 111
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA §307
http://www.arl.org/infor/frn/copy/ucitapg.html
Joint letter from library association.
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
Kaner, Cem “Why You Should Oppose UCITA” The Computer
Lawyer Vol. 17 Num. 5 May 2000. Pg. 23-25
UCITA
Op. Cite.
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA § 816
Ibid.
Ibid
Kaner, Cem “Why You Should Oppose UCITA” The Computer
Lawyer Vol. 17 Num. 5 May 2000. Pg. 26
Ibid
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
UCITA
Kaner, Cem “Why You Should Oppose UCITA”
The Computer Lawyer Vol. 17 Num. 5 May 2000. Pg. 20-21.
Brennan, Lorin ”Through the telescope II: The
Meaning of UCITA” Mississippi College Law Review Vol. 20:45 Pg. 49.
Nimmer, Raymond T. “UCITA: A Commercial Contract Code”
The Computer Lawyer Vol. 17, Num. 5 May 2000. Pg, 3-19
Brennan, Lorin ”Through the telescope II: The
Meaning of UCITA” Mississippi College Law Review Vol. 20:45 Pg. 49
Kaner, Cem “Why You Should Oppose UCITA” The Computer
Lawyer Vol. 17 Num. 5 May 2000. Pg. 20-32
Op. Cite
Ibid
Ibid
Nimmer, Raymond T. “UCITA: A Commercial Contract
Code” The Computer Lawyer Vol. 17, Num. 5 May 2000. Pg, 3-4
Kaner, Cem “Why You Should Oppose UCITA” The Computer
Lawyer Vol. 17 Num. 5 May 2000. Pg. 21.