The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters. 

May 2000

E-Commerce Law Heats Up

Several State Legislatures have started considering the Uniform Computer Information Transactions Act ( UCITA) and the controversy has already begun to hit the news. The UCITA started a few years ago as a proposed new article 2B to the Uniform Commercial Code (UCC). Even while it was being drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL), the proposed article 2B generated a considerable amount of conversation among lawyers.

The proposed law addresses the contractual validity of shrink-wrap software license agreements and the downloading of software from the Internet. Opponents say the proposed law would put too much power in the hands of software manufacturers to the detriment of consumers. Proponents say that the proposed law covers serious gaps in the law of on-line contract formation with respect to software which might not otherwise be considered tangible goods under the UCC and shrink-wrap license agreements which might not be readable until after the sale (contract formation).

Disagreement among the various lawyers and reviewers, caused the proposed UCC article 2B to be withdrawn and re-drafted as a stand-alone code called UCITA. UCITA was approved by the NCCUSL last July and sent to all 50 states for adoption. Since then a long list of organizations including a number of State Attorneys General have voiced their opposition. Only a few state legislatures have actively considered the law, and as they do, the disagreement among lawyers is becoming public. Virginia became the first to adopt it, but set implementation for next year. Read a March 29 article about Virginia by M. Zuckerman in the USA Today archives and a follow-up article on April 27 about Maryland's adoption.

It appears that some of the problems are being caused by the cross-over of the proposed law between the "unlimited" protection of consumers by the courts and the reality of contract terms faced by buyers and sellers under the UCC. Get a better idea of the controversy by checking out some of the many web sites. Here are two I recommend: 

If it hasn't already, the proposed law will someday be considered in your state. As that happens, I think we, as professional buyers, will want to be ready with our comments and suggestions. Certainly, advising the legislature to adopt the law, with changes like Maryland, isn't going to help make our jobs easier. While the controversy continues, we are already creating on-line contracts and creating a "law" of common practice.

What can we do? Read the proposed statutes, read the arguments, read the fine print in software shrink-wraps and prepare trading partner agreements when buying on-line. Get familiar with the subject and then write to your State and Federal representatives. Ask them to pull together the various proposed statutes into a comprehensive and meaningful set of laws. (This isn't the only proposed law covering electronic transactions and digital signatures being considered.) Make sure they hear the voice of "buyers" and do more than just protect consumers or provide long-term employment to lawyers.


MLTWEB is assembled and maintained by Michael L. Taylor, C.P.M. 
Materials and articles prepared by Mike may be shared for purchasing education provided that this source is cited and no fee is charged. The rights for any other use are withheld.
Copyright;  Michael L. Taylor, C.P.M.
Last Updated: 11/26/2016