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

Electronic Commerce Update

(O.K. , I admit it in advance. This article contains opinions of the author which all my lawyer friends would probably say nasty things about)

The Uniforms Computer Information Transactions Act is living up to it's reputation as a controversial measure. Developed and promulgated to the states by the National Conference of Commissioners on Uniform State Laws in the summer of 1999, the UCITA seems destined to be mired in red tape for a long time.

The Act started as a logical development to codify the growing use of the Internet, Electronic Commerce, on-line software, shrink wrap license agreements and other non-paper ways of doing business in the new millennium. Originally conceived as a new article 2B to the UCC, the ACT was re-written as stand-alone code when the drafting committee couldn't reach a finally agreement on the new article 2B.

From the beginning the act has been controversial. Allegations that it favors big business and hurt the consumer are easy to find. You can find one compilation of the campaign against the Act at ????? . The response from the drafting committee and it's supports has been just as vocal. Check out ????

Last I heard, the act has been adopted in two states. Virginia adopted it and then set the effective date for a year later (is this adoption or not?) 26 States attorneys general have signed a letter opposing the Act. Read the big article March 29??? on the subject in the USA Today archives,

So what's the bottom line? Here is my "non legal advice" opinion.

Do we need some legal code? Sure, why not. Consider that the UCC might have a problem with software not being a tangible product, digital signatures not being in "writing" and a shrink wrap agreement being partially hidden until after the sale. However, also consider that the courts tend to protect consumers and that merchants are already establishing the precedents for e-commerce regardless of the legal delays. In any event a little code would at least give us something to argue about we go to court.

Is UCITA good or bad? I guess it depends on which web site you read. Consumer groups, some Attorneys General, and Caterpillar Tractor think UCITA (as it is written ) is NOT a good idea. They agree it is a good idea, but don't think it does enough to protect consumers. Of course we are not "consumers" and may not need the same level of protection. (When we buy hot coffee, we expect it to be hot.)

Will UCITA be generally adopted? Not in our lifetime. What good is a "Uniform" law if only a few states adopt it? If it is unclear and confused today, just wait. Unfortunately, many legislators and lawyers believe that adding more words is the best way to clarify a law. Of course, the more words they add, the less they agree on the meaning, leading to more words, etc.

If not UCITA, What? This is one positive aspect of the whole situation. Additional clarification to the UCC has also been submitted to the states in the form of the Uniform Electronic Transactions Act. It doesn't quite address the same issues, and it too was re-worded at the last minute, but it is a start. In addition, there are numerous pieces of federal legislation in various stages of the process which are addressing e-commerce issues and subjects.

For us, probably the most important thing to consider is that we are developing ways of doing business which set precedents that merchants can live with and use. Hopefully, the legislation will e delayed until we have enough time to figure out a reasonable way of handling e-commerce among companies. Unfortunately some of that precedent setting might be in court. On the other hand; the vast majority of contractual issues are resolved by negotiation among the parties long before the court option]. However, if we had waited for a "law" to allow us to use fax signatures in contracts, the industrial revolution in America might have been delayed, we would all be vassals to England, Homer would have never written the Odyssey, etc.

Is our position drafty? Yep! Probably the best piece of advice I can give, it to recognize that e-commerce is still new. Don't jump in without thinking about it. Establish a written agreement between yourself and your trading partners that spells out what you plan to do and how you plan to do it. Cover yourself in advance with a no-fault agreement to work together to take advantage of the new e-commerce processes to improve efficiency and competitive advantage. Make e-commerce live up to it's possibilities, not drown in legal red tape.

The alternatives? Don't use e-commerce until the laws are passed. Hold your breathe until you turn blue {Da Ba De Ba…}


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