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 What Is UCITA?

A proposed law called UCITA, or the Uniform Computer Information Transactions Act, would provide a standardized set of regulations for selling software and other transactions involving computer technology. Similar to how the Uniform Commercial Code unifies the way things are sold between sellers and buyers, UCITA makes an effort to make standards regarding:

Only two states, Virginia and Maryland, have passed UCITA. Other states did not approve of the law. However, some legal experts, including renowned professor of commercial law Jean Braucher, think the UCITA has academic merit.

The NCCUSL withdrew a resolution urging the American Bar Association (ABA) to approve UCITA in 2003, demonstrating that UCITA lacked the support required to become a uniform act. UCITA has encountered strong opposition from several groups.

Provisions

The main goal of UCITA is to update existing commercial trade rules for the contemporary software era. In terms of software, it is particularly debatable. The code would automatically hold a software developer accountable for flaws and mistakes in the application. Any term of UCITA, however, may be overridden by a shrinkwrap license. So that they are not held responsible for software problems, commercial software developers can include such a license in the box.

However, free software given without charge and via downloads would not be able to impose a shrinkwrap license and would be accountable for mistakes. Small software developers who lack legal expertise would also be in danger.

By referring to the program as a license in the EULA rather than a sale, UCITA would clearly permit software developers to impose any legal restrictions they desire. As a result, the first sale doctrine would no longer allow purchasers to resell second hand software.

Without UCITA, courts have frequently held that even while the EULA purports to grant a license, the acts of the software provider and the buyer clearly demonstrate that a license was not granted and that, instead, the program was purchased, entitling the buyer to resale it to anybody.

Background of UCITA

The National Conference of Commissioners on Uniform State Laws (NCCUSL) authorized and advocated for the enactment of UCITA in all 50 states in July 1999.

In an effort to update and revise Article 2 of the Uniform Commercial Code (UCC), NCCUSL and the American Law Institute (ALI) collaborated to create UCITA over the previous ten years. The sale of products was governed by Article 2 of the UCC, which was created in the 1940s and 1950s to harmonize rules impacting commercial transactions throughout the nation.

Many people believed that transactions involving software and information were not sufficiently covered by Article 2 of the UCC. Two key ways in which software contracts differ from those involving ordinary goods are:

  1. They transmit intangible goods, and
  2. They frequently involve a license of the right to use rather than a sale.

Nobody could have predicted the changes that had occurred recently in software and hardware development and sales because commercial transactions were done very differently when the UCC was created.

Since the creation of the UCC, the American economy has undergone a significant transition from a good- to a service-based economy, with software playing a significant part in this new market.

The sector of the American economy that is growing the fastest is information technology, which contributes more than one-third of the country’s economic growth.

These significant developments are being attempted to be addressed by NCCUSL. It remains to be seen if its endeavor will be successful.

UCITA was supposed to become a new article of the UCC called 2B from 1995 until the spring of 1999. Significant rifts started to form in the process as the drafting phase came to a close, and ALI withdrew from the effort.

Various interest groups commented on and criticized Article 2B in considerable detail. As a result, in April 1999, ALI decided to stop supporting the proposed law.

Without ALI’s backing, UCITA was introduced as a proposed uniform law that needed to be approved by all 50 states rather than a new UCC Article.

Goals And Purpose

The NCCUSL lists the following as the goals of UCITA:

  1. Support and facilitate the maximum potential of computer information exchanges in cyberspace.
  2. Clarify the legislation controlling the exchange of computer data.
  3. Facilitate the expansion of the business practice in computer information transactions through commercial use and party consent.
  4. Uniformize the law throughout all relevant jurisdictions.

General Provisions, Formation and Terms, Construction, Warranties, Transfer of Interests and Rights, Performance, Breach of Contract, Remedies, and Miscellaneous Provisions are the nine sections that make up the act.

Contracts for “a motion picture, sound recording, musical piece, or phonorecord” and “audio or visual programming supplied through broadcast, satellite, or cable” are prohibited. Even if these contracts were made available online, UCITA would still not apply to them since they would directly compete with online businesses for interactive computer information.

Suppose a contract contains both computer information and other subject matter. In that case, UCITA only applies to the portion of the contract that contains computer information unless the computer information is the major subject matter, in which case it applies to the entirety of the contract.

Except in cases where obtaining the software is the primary goal of the transaction, UCITA does not apply to software contained in commodities other than computers or computer peripherals.

Supporters of UCITA contend that it brings uniformity to a corpus of law that was previously confusing. They contend that UCITA provides common law and statutory consumer protections, as well as several warranty guarantees for licensees. Good faith and unconscionability are the two of these protections that are most frequently used. The parties must act honestly per the act.

The Impact of UCITA on Online Users

Even though UCITA was developed to harmonize computer information rules, it has generally come under fire for restricting consumers’ rights and being overly supportive of software providers. UCITA would restrict the transferability of software licenses between users by outlawing the sale of secondhand software. Additionally, shrink-wrap and click-wrap licenses may unfairly restrict consumer use and manufacturer warranties.

What Is the UCITA’s Present Status?

Only two states (Maryland and Virginia) have passed UCITA yet, but vendors can still choose those states’ laws to apply to software contracts, even if the vendor and user are in separate states. Additionally, courts may apply UCITA, as a rule, to resolve licensing disputes because there is no present unified statute.

Other Crucial Details

Optional or Required
If a transaction materially involves computer information, parties may fully “opt-in” to UCITA’s regime and choose one set of rules to govern the entire transaction. Additionally, parties are permitted to participate in UCITA for transactions involving information in a medium otherwise not covered by the act’s guidelines.

Per specific protective constraints for mass-market transactions, UCITA also allows parties to “opt out” of its conditions.

Should I Speak to a Lawyer If I Have a Problem That the UCITA May Cover?

Because the internet enables users to deal internationally, more laws that could affect your consumer rights may be applicable. When dealing with a software license issue that may come under the purview of numerous jurisdictions, it is important to get in touch with an entertainment attorney.

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