This is a model law that was drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL). It was proposed to create uniform and clear set of rules to govern online access, software licensing and various transactions in computer based deals. It was also the rule intended to create a common certainty and uniformity to rules applying to transaction of information technology under the Uniform Commercial Code. Specifically, the law tries to codify as well as clarify rules concerning shrink wrap licenses, reverse engineering, warranties, fair use, consumer protection and duration of licenses as well as their transferability.
It provides the criterion used to approve the validity of browse wrap and shrink wrap agreements and software licenses if the user is given the opportunity to return goods at sellers expense if at all the terms of the licenses are found to be objectionable. The rise of this act was ignited by the Uniform Commercial Code’s failure to cover software transactions adequately. The code was considered ill suited to cover intangible and licensing transactions (Espana, 2003, p. 357).
Consideration of UCITA to replace the code did not mean that it served sufficiently, but it has also been too controversial and hence opposed by attorney generals and consumer groups of many states. It is criticized to reinterpret licenses and contracts and also weakens consumer protection. These aspects turn out to be unduly favorable to producers of software and reasonable entitlements of consumers are also disregarded. This law was proposed as uniform act to modify the uniform commercial code by the American law institute and the national conference of commissioners on uniform state laws, originally submitted in 1999.
In 2002, it was withdrawn because American law institute did not grant its assent. In response to this, NCCUSL renamed the proposal as the Uniform Computer Information Transactions Act (UCITA). This was followed by making attempt to pass it as a law (Nimmer, 2004, p. 7). Additional critics have argued that the law is unable to cover sales transactions and computer software licensing. This implies that the law does not have adequate mechanisms to protect software manufacturers as well as consumers. Efforts to pass the law have been resisted in many nations, with reported success in Maryland and Virginia.
To respond to some of the dispute over the applicability of the law, some amendments to the law were made in 2002. Following the reforms, some opponents withdrew and others remained strict. In 2003, UCITA was removed by the NCCUSL from its priority enactment list and placed it in approved uniform acts, recommended and available for adoption by any willing state. According to the provisions of this act, a contract can be formed in any style that can indicate acceptance, offer or conduct of operations of electronic agents or both parties involved.
If some terms are not agreed upon, it does not fail for indefiniteness because there is reasonable certainty for availing appropriate remedy. If there is material disagreement on material term such as scope of the term, a contract is not formed. An order to acquire current delivery or prompt copy invites and allows nonconforming or conforming shipment activities. However, nonconforming shipment copy is unacceptable in case the licensor seasonably notifies the licensee that the offer is only availed as an accommodation to the licensee (Aaron, 2006, p. 132).
Acceptance alters an offer materially if there are material conflicts or variance of the offer terms. Seasonable and definite acceptance expression operates as acceptance even f the terms vary unless acceptance alters the offer materially. Here, the parties must accept the other partner’s acceptance by manifesting assent. A conditional acceptance precludes formation of a contract only if the other party agrees manifesting assent terms. Preclusion can thus take place when one of the parties refuses to permit performance, refuse to perform or else refuse to accept the agreement benefits not until the proposed terms are accepted.
In mass market transaction, the licensor is not authorized to review records concerning opposed terms from licensee before the licensor is obligated to deliver the information or else agree by manifesting assent. The current status of UCITA in terms of existing adoption and opposition is analogous compared to the 1950s promulgamation of UCC. Intense concerns in this law pertained to article two, which described legislations concerning sales of goods. After the promulgation of the uniform code, it suffered a non enactment decade and generated passionate opposition.
Even after article two underwent modifications, its initial long hiatus continued. The new reforms were also charged with biasness against consumers and merchants favoritism. In classrooms, angry rhetoric erupted from new law students who were very sensitive to business bias and injustices. The political influence n the implementation of this law has been very controversial, leading to resignation of the original reporters and discharging of the original drafting committee. This has made the law remain opposed largely by consumer interest groups and industries (American Law Insitute, 2005, p.
43). Regarding UNITA, a funny scenario has been observed in which, highly controversial law proposals of 1950s have been accepted and transformed to comfortable rules, making any reforms to be passionately resisted. It has seemed that startling ideas have recently been made commonplaces by debates and judicial rulings. This means what was perceived new sometimes, somewhat becomes old, acceptable and comfortable. Studies in 2000 stated that UCITA enactment would provide gains for modern commerce in the field of digital information.
For several years, UCITA has been a law in Virginia and Maryland, with no significant upheaval in commercial practice or in case law. This has been signaled by the fact that none of these states has produced single decision since they enacted UCITA (Bennett, 2002, p. 85). This has gone contrary to their expectations that, this would lead to costly and massive upheavals. A good contract law is marked by producing a little change in litigation or practices by codifying the already existing legislature.
Even though the statute of UCITA was not directly applicable in these nations, courts in their forms of jurisdictions feel that the statute is a source of analysis and basis of decision making. In the United States, the role of contact law is facilitating transactions. This law has been noted to poorly perform in assuaging demands to legal coverage upon their desired results. Therefore, contract law is a kind of soft law that is not made to impose results on contract parties that are not part of their intended transactional goals. This law has been applied in issues related to sales of goods and licenses of digital information.
Some courts have used article two in dealing with digital software licenses directly or indirectly, through reasoning by analogy or predominant purpose test. It has however been hard for courts to realize that software is a separate and a distinct commercial subject matter (Nimmer, 2005, p. 9). Cases applying article two concern warranty and cure, primarily based on the believe that common law does not rest on clear guidance. Because of fifty years of application, some courts feel that article two provides relatively familiar and coherent rules.
Cases concerning use of similar rights and ownership of a copied license reject article two in judging warranty of complex software transactions. UCITA provides that sales law is not suitable in the practice of licensing because such deals are intangible. It is perceived that computer information licensing area should not be forced into a body of law. Regarding the sale of information technology items, several controversies have led to a generalization that software transactions still remain within the legislative void of inappropriate law, until a national alternative is reached.
In the same line of argument, it has been difficult for downloadable software to be treated as goods because they are intangible in nature. In modern commerce, ideas that software and digital information can not equal goods and their licenses can not equal good licenses are obvious even if the law is forced to ignore the differences. These aspects build up UCITA within the legislative arena. Definitions of software and goods drawn on UCITA are contained in the article 9 of UCC which was promulgated in 1990s (Espana, 2003, p. 362).
Article 9 has been adopted within fifty states without significant resistance. It thus represents a concept that has been modernly enacted to draw the difference between software and goods. Under this article, computer programs and software are not goods but intangibles. Exemptions exist in cases where the programs are customarily treated and embedded in as part of ordinary goods. This is covered within designation for purposes of article 9. The final resolution by ALI and NCCUSL finally agreed that gods do not include information.
According to UCITA, information refers to images, mask works, data, computer program and text without excluding compilations and collections. According to federal communications decency act, information includes computer program. Up to this end, it is clearly expressed that there are inevitable transition recognition of differences both in fact and in policy. Virtually, it is imagined that plastic matters more compared to program when it comes to licensing computer programs. UCITA operates on ordinary principle that simple sale and simple license should lie within the agreement.
Since UCITA began, courts have consistently and routinely accepted that mass market licensing is acceptable and common form of transaction. This law is a part of commercial practice and broader pattern, regardless of its inability to create licensing and set out its acceptability in economy and law (American Law Institute, 2005, p. 108). In contracting issues, UCITA provides that a person is only bound by contact terms if he or she is in total agreement with them. This is indicated by manifesting assent by conduct or voluntary words with full realization that the other partner also realizes the deal as a contract.
The assent is not enforceable if it does not occur till after the initial agreement unless the person in question is mandated to say no or unwind the transaction. This description of law has been classified as layered contracting with parties defining full terms of contract with respect to time and layers. This approach of contracting in UCITA is consistent with the principles of article two and restatement, which allow for flexibility on when and how contracts should be made. Unfortunately, there are arguments that everything must happen in one time with the law filling any blank spots.
These arguments are based on a desire to reduce the impact of agreed terms and animosity to standards forms (Nimmer, 2005, p. 11). This does not depict how commerce operates or how courts apply contract law independent of UCITA. Several scholars argue that UCITA maintains balanced and contextual approach to standard terms related to paper world. Today, courts enforce consistently click wrap and shrink wrap licenses. A vaguely supported argument by some of the scholars is that layered contracting should be illegalized. Too, commercial software in commerce does not support this.
As a result, courts enforce licenses when similar standards as provided by UCITA are met. To decide whether any enforceable contract exists, courts employ ordinary contact law. The approach used by UCITA smoothly flows along developing and existing sense of practice and appropriate law, a point that is apparent as one steps away from the bitter and contentious realm of legislative policy debate (Ditzion, Geddes, 2003, p. 432). Although much of the above arguments seem to support UCITA, this does not mean that the act was excellent. Like any other act, it was subject to dissatisfaction.
For one, the act does not contain reverse engineering clauses. Debates concerning license enforceability provisions from reverse engineering software started in Europe, in 1970s. by then, companies were fighting over the terms proposed by European union software directive. Eventually, the directive extended copyright to software, providing narrow exception to reverse engineering. This limited the ability to discover otherwise available information for establishing interoperability with licensed software. The directive made the license agreements inconsistent with narrow exception by invalidating them.
Regardless of absence of invalidating license clauses in the United States, cases have been held referring allegation copyright infringement, exemption from copyright claims and feelings that necessary reverse engineering is a fair element. Reverse engineering exemptions were enacted to solve a clash between anti circumnavigation provisions and digital millennium copyright act. It is this time when UCITA was forced to take the issue serious. According to this body of law, the court may decide to invalidate a contract term if the term violates fundamental public policy, clearly outweighing the interests to enforce contract terms.
In 2002 amendments, precluding clause was adopted to bar reverse engineering. In cases of broadly distributed program, reverse engineering is fair to obtain information on interoperability. In US, UCITA is the only body that addresses direct issues on limitation of enforceability of no reverse engineering clause. Another controversial area of UCITA pertains to electronic restrictions. This is particularly the ability to use electronic means in enforcing rights under their licenses (Ditzion, Geddes, 2003, p. 437). In this coverage, the issue involved systems preventing breach and systems enforcing rights preventing further use after breach.
Breach could compose the time of use consistent with contract and the limit to number of contract uses. Self help rule are the most controversial. For small companies licensed to large companies, self help was seen efficient and valuable remedy. In Maryland and Virginia, there are substantive and extensive procedural limitations making electronic self help illegal. Exception can only apply if it is agreed in the contract expressly and preceded by lengthy notice. In this respect, license has all the rights to seek injunction. The 2002 amendments flatly banned electronic self help.
During UCITA debates, congress enacted DMCA to prohibit circumnavigation and protect use of electronic controls. Adoption of UCC article 9 allowed self help enforcing default rights by disabling a machine on restriction of no breach of peace. Article 2A allows self help to make enforcements regarding rights on lease breach (Bennett, 2002, p. 121). The restatement of conflict of law states that provision of choice of law in contract is enforceable unless the effect of the contract is violating fundamental public policy and altering a mandatory rule of state in absence of contractual choice.
Currently, enacted versions of UCC Article 1 require that chosen state law should have reasonable relationship to the transaction but does not address the fundamental public policy rule. The context in which UCITA addresses choice of laws amplifies the necessity of selecting applicable law. The law codified restatement and eliminated reasonable relationship test (Aaron, 2006, p. 299). By the choice of this law, the same system provides that consumer rules that are non waivable or mandatory can not be changed. Revised article 1 incorporates complex rule, applying consumer of homicide regardless of non mandatory or mandatory nature.
Doctrinal and political fights directed to promulgation of UCITA have extended to fundamental issues on contract law. It has been recommended that intangible assets have a value that is greater or lesser value compared to goods, with licensing forming important commercial transaction in all areas of commerce. In terms of immediate enactment, the future of UCITA is not clear. Terms of the rationale and terms supporting UCITA will continue playing increased role in playing vital roles in future.
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