Uniform Computer Information Transactions Act

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Uniform Computer Information Transactions Act

The Uniform Computer Information Transactions Act (UCITA) was promulgated to fill a void in existing contract law in the treatment of computer information. In a preface to UCITA, its creators wrote, "Our economy has experienced fundamental change … legal rules that are not relevant to commercial practice or that are uncertain in application inhibit contracting or raise transaction costs. UCITA was drafted in response to this fundamental economic change and need for clarity in the law."

UCITA had a somewhat complex history. It was originally envisioned as a new Article 2B of the Uniform Commercial Code, but its various drafts were unable to satisfy the needs of the affected companies and consumers. Consequently, the National Conference Commission on Uniform State Laws (NCCUSL) decided to redraft the proposal as UCITA, narrower than what had been envisioned for the UCC. It was first introduced in 1999.

UCITA applies to computer-information transactions, defining them as "an agreement or the performance of it to create, modify, transfer, or license computer information or informational rights in computer information." UCITA further defines computer information as "information in electronic form that is obtained from or through the use of a computer or that is in digital or equivalent form capable of being processed by a computer." This definition includes a copy of information in that form and any documentation or packaging associated with the copy.

UCITA applies only where there are computer-information transactions, if computer information is not the primary matter of the transaction but is a secondary matter, UCITA applies only to the portion of transaction involving computer information. UCITA applies to agreements to create, modify, transfer, or distribute computer software, interactive multimedia products, computer data and databases, inter-net and online information and other computer-information transactions. Other than those areas that do not fit into the definitions of computer information or computer-information transaction, UCITA expressly states that it does not apply to (a) financial services transactions; (b) motion pictures or audio or visual programming, other than in (i) a mass-market transaction or (ii) a submission of an idea or information or release of informational rights that may result in making a motion picture or a similar information product; or sound recordings, musical works, or phonorecords, or an enhanced sound recording, other than in the submission of an idea or information or release of informational rights that may result in the creation of such material or a similar information product; (c) compulsory licenses; (d) employment contracts; (e) contracts that do not require that information be furnished as computer information or in which the form of the information as computer information is otherwise significant with respect to the primary subject matter of the transaction; or (f) subject matter within the scope of other UCC Articles.

Despite these exceptions, UCITA affects a variety of different contracts. As the preface puts it, "UCITA governs access by Fortune 500 companies to sophisticated databases as well as distribution of software to the general public; it also covers custom software development and the acquisition of various rights in multimedia products." Included in its scope are shrink-wrap licenses and click-wrap agreements, both of which it validates; it also recognizes electronic records, authentication, and agents. The provisions of UCITA include general provisions, contract formation and terms, contract construction, warranties, transfer of interests and rights, performance, breach of contract, and remedies.

"UCITA is the first uniform contract law designed specifically to address the new information economy," according to its preface. Critics have assailed it as anti-consumer and pro-business, and they have claimed that its protections mostly protect the software industry. In response, the NCCUSL amended UCITA 38 times, adding such consumer protections to permit public criticism of the performance of the computer information and making it clear that a buyer must have the opportunity to review the terms of an agreement in order for the terms to be enforceable. It now also explicitly states that other laws will continue to apply where known defects are undisclosed. Nonetheless, states have been slow to adopt UCITA, and as of 2003 only Maryland and Virginia have adopted its provisions.

Further readings

Dively, Mary Jo Howard. 2000. "The New Laws That Will Enable Electronic Contracting: A Survey of the Electronic Contracting Rules in the Uniform Electronic Transactions Act and the Uniform Computer Information Transactions Act." Duquesne Law Review 38 (winter).

National Conference of Commissioners on Uniform State Laws. 2002. Uniform Laws Annotated: Preface to Uniform Computer Information Transactions Act. St. Paul, Minn.: West Group.

Towle, Holly. 2000. "Mass Market Transactions in the Uniform Computer Information Transactions Act." Duquesne Law Review 38 (winter).

References in periodicals archive ?
1) The consensus for the need for a uniform law for software contracting that ostensibly existed at the time of the UCC Article 2B effort may have eroded over time as technology advanced, contracts became more sophisticated, and courts addressed disputes over agreements involving software under either common law contract or the UCC.
One of the features of the proposed UCC Article 2B is that it contains an implied warranty of merchantability tailored specifically for software and electronic information transactions.
Look here for a list of articles and letters that follow the history of UCITA and Article 2B.
NCCUSL and the American Law Institute began drafting UCC Article 2B several years ago.
Because the change from Article 2B to the UCITA provided only a semantic change in the Act's title, the criticisms rendered on Article 2B apply equally to the UCITA.
Article 2B uses this standard for electronic and Internet transactions.
Article 2B is still in draft form and applies to a very limited range of transactions.
Interestingly, the Reporter's Notes to the original UCC Article 2B Draft also relied on this argument to support its conclusion that section 301 generally should not preempt contracts.
In this regard, it is important to note that, early in the drafting process, the potential for Supremacy Clause preemption was not lost on the NCCUSL, for in the Reporter's Notes to Article 2B, the reporter stated: "In some cases, preemption may arise under the federal constitutional Supremacy Clause.
A third development has been the making of significant changes to proposed Article 2B of the Uniform Commercial Code.
A committee of lawyers has recently proposed a new set of commercial law rules, known as Article 2B of the Uniform Commercial Code (UCC), to govern software licensing and other transactions in information.
The result of these efforts is draft Article 2B of the UCC that regulates the licensing of software and of information more generally.