(E-Commerce) UCITA: The Uniform Computer Information Transactions Act

September 1, 2000 Advisory
1

For years, a committee of renowned professors, practitioners, licensors
and licensees have worked on a commercial code and legal infrastructure
for the information age. The result of these efforts is UCITA (the
"Uniform Computer Information Transactions Act"). UCITA attempts to
provide uniform state laws governing software and e-commerce. To date,
Virginia and Maryland have signed UCITA into law, and at least six other
states (not yet Connecticut) have introduced bills to adopt UCITA.
Commentators generally expect that UCITA will be adopted by a majority
of states over the next five years.
UCITA endorses shrink-wrap and click-wrap licenses, creates a new right
to return for refund plus expenses, conditions consent upon the
"opportunity to review," and extends certain warranty rules to software
and licenses (e.g., software must conform to the contract and express
warranties cannot be disclaimed). UCITA also creates new implied
warranties for software and information such as warranty relating to the
accuracy of informational content, warranty of noninterference, warranty
of fitness for a particular purpose, and warranty of system integration.
These warranties can be disclaimed in a specific and conspicuous manner.
UCITA makes electronic records and signatures as effective as written
records and signatures, equating the electronic and written forms. UCITA
also acknowledges the validity of e-agents (computer programs used to
create and perform contracts) and provides basic rules and limitations
for e-agents in creating binding obligations. Under both UCITA and
current case law, clicking on a button clearly designated as indicating
agreement with the terms ordinarily will suffice as assent to making a
contract.
UCITA does not apply to "financial services transactions." Core banking,
payment and financial services are excluded, but a bank's web contracts,
access contracts, and software licenses are subject to UCITA. However,
financial services organizations may choose to "opt in" to have the
act's provisions apply to all, part, or none of a transaction.
Overall, UCITA is positive for the financial services industry,
licensors of technology and providers of electronic commerce and
electronic financial services, because it provides commercial
predictability to transactions. UCITA has been at once criticized for
providing too many and too few protections for consumers. UCITA provides
greater protection for consumers by attempting to create a uniform code and by generally deferring to state consumer protection statutes where UCITA and state laws conflict.
A major point of contention in the drafting and approval process of
UCITA involved the right to electronic self-help. Current law allows a
party to use electronic means to enforce a right to repossess or prevent
use of property in the event of breach. Licensees, buyers, debtors and
lessees are vulnerable to such an electronic shut-off device. UCITA
restricts this right of self-help by requiring assent to the term
setting forth this right, fifteen days' prior notice, and judicial
review. UCITA further prohibits electronic self-help, even if authorized
in the contract, in situations where its use would entail a breach of
the peace or result in a substantial injury or risk to property, a
party, or a third party.
For further information contact Ges Selmont 203-498-4325, [email protected]