Consumers oppose UCITA. The 2002 amendments don’t solve UCITA’s
fundamental problems.
Only two states have adopted UCITA. Three other states have adopted “bomb
shelter” legislation attempting to shield their state’s residents
from UCITA being applied to their contracts. UCITA continues to be opposed
by consumers, computer professionals, librarians and even insurance companies
and “brick and mortar” companies like Caterpillar and Boeing.
Thirty-two state attorneys general stated in 2001 that, "UCITA is
so flawed that any amendments which could reasonably be expected . . . would
not significantly ameliorate UCITA’s negative impact on consumers, or
on the marketplace in general."
The newest version of UCITA did not even address some of the most important
criticisms made of an American Bar Association “Working Group”
specially appointed by the President of the ABA.
UCITA is not part of the Uniform Commercial Code because
the American Law Institute had “significant reservations about both
some of its key substantive provisions and its overall clarity and coherence,"
such that consideration of UCITA was withdrawn by the ALI.
Below are some of the worst problems with UCITA
that cause consumers to continue to oppose it:
No Warranties. If UCITA passes, consumers buying cheap, used cars will
have more protections than consumers buying brand-new software. UCITA
allows software publishers to sell new software “as is,” the way
used cars are sold in many states, meaning there is no warranty that the software
works right and that the consumer not is entitled to a refund if it does not.i
Trapped by Hidden Terms. UCITA allows the consumer to be trapped into
agreeing to the “as is” provision and all sorts of terms that the
consumer can see only after the consumer pays for the software or the on line
service. Under UCITA these provisions may be placed in the boilerplate fine “print”
that the consumer sees for the first time on the computer screen after the consumer
buys the software at the mall and takes it home (or downloads it), unwraps the
box, puts the disk in the computer and loads it -- when the consumer is ready
to use the software for the first time. That is when the consumer finally has
the opportunity to see the contract provisions, restrictions, disclaimers, and
limitations that UCITA permits. While the proponents of UCITA point to its “right
of return” provision, this “right of return” vanishes as soon
as the consumer clicks “I agree.” The consumer is not given a right
to try the software to see if it works.ii When buying a used
car consumers are at least warned they are buying the car “as is”
by a sticker on the car window that the consumer sees before paying for the product.iii
“Received” by Consumer -- on Someone Else’s Website. UCITA doesn’t just allow sellers to withhold access to initial license terms.
UCITA also allows sellers to give necessary notices of software bugs, security
problems and even changes in the terms of the original agreement by posting them
only on the seller’s web site. Consumers can be deemed to have “received”
a notice which was only posted by the seller on the seller’s web site and
never set to the consumer at all, even by e-mail. iv
Similarly, UCITA allows for notice of changes in the original agreement to be
delivered only by posting on the vendor’s web site. (Such a change could
be an increase in the cost of an on-line service that would be charged to a credit
card.) To contest these changes a consumer would have to prove in court that the
manner of giving the notice (or the change in terms) was “manifestly unreasonable in light of the commercial circumstances. [Emphasis added]”
v
Where the consumer can sue -- or be sued. If the consumer and the seller
have a dispute over bad software or poor on-line service, UCITA allows the software
publisher or Internet service provider to name almost any state in the United
States as the state where the consumer’s law suit has to be brought.vi Again this can be one of those hidden terms the consumer does not see until after
purchasing the product and before trying it out. Recent amendments to this provision
of UCITA only changed “and” to “or” in one place, and
provided that the court where the suit is brought gets to decide the issue. This
can help the consumer if her or she sues first, but allows sellers to sue consumers
in the vender’s home state. These small changes do not change the basic
unfairness of the choice of law provisions.
Restrictions on Critical Reviews of Software. The bedrock of our free
market economy is competition. This competition is based on information used to
compare products. As explained above, UCITA inhibits competition in warranty and
other terms of the sale transaction by allowing these terms to be hidden from
the consumer until after the sale takes place. Consumers frequently also rely
on reviews and comparisons of products in magazine articles etc. UCITA generally
allows a software license to say that a magazine or newspaper cannot publish a
review of the software without the publisher’s permission unless and until
the courts find such a provision to be unenforceable. Software publishers will
not give permission unless they expect the best review. So bad reviews of software
are prevented from appearing in newspapers or magazines making it harder for consumers
to find out if software works right before consumers choose between competing
software. vii
Recent amendments to UCITA at first appear to solve this problem by making unenforceable
any terms in the agreement that prevents lawful public comment on software in
its “final form” by “end users.”viii However, reviewers are probably not “end users” so they can still
be silenced.ix And software vendors will avoid this by just
not offering “final” versions of software and instead offering everything
“Beta” and as “advanced versions” Moreover there is no
reason to allow contracts to prohibit free speech regarding “beta”
versions.
Existing State Consumer Laws Undermined. Existing state consumer protection laws
generally apply to "goods." These laws have been used to provide
consumer protections for software purchases on the grounds that the software is
in essence “goods.” To be safe, as UCITA passes, consumers would have
to seek amendment of every state consumer protection statute applying to goods
or services in order to explicitly re-provide basic consumer protections for software
and on-line services. UCITA itself suggests legislators should review their other
statutes in a “legislative note.” Amendments to consumer laws would
probably be opposed by the powerful software vendors. This will be an impossible
task for consumers.
A recent amendment to UCITA did attempt to ameliorate this problem by stating
that “The applicability of a consumer protection law is determined by that
law as it would have applied in the absence of this [Act].” However, judges
are still likely to be influenced by UCITA’s new separation of software
licences from goods when determining whether existing consumer protection statutes
applying to goods apply to software.
And, importantly, many provisions that protect consumers are also applicable to
non-consumers, such as protections in UCC Article 2. Preserving consumer protection
laws will not preserve the protections that apply to everyone including consumers.
Prepared 1/7/2003
by David B. McMahon, J.D.
Mountain State Justice, 922 Quarrier Street, Suite 525, Charleston, WV 25301
304-415-4288 wvdavid@access.mountain.net
For more information and documents see http://www.nclc.org/ucita/index.html
_____________________________________________________________________________
Notes from “Consumers STILL Oppose UCITA.”
i. “(UCITA) SECTION 406. DISCLAIMER OR MODIFICATION OF
WARRANTY. . .
(b) . . .
(3) Language in a record is sufficient to disclaim all implied warranties
if it individually disclaims each implied warranty or, except for the warranty
in Section 401, if it is conspicuous and states “Except for express
warranties stated in this contract, if any, this `information’ `computer
program’ is provided with all faults, and the entire risk as to satisfactory
quality, performance, accuracy, and effort is with the user”, or words
of similar import. . . .
(c) Unless the circumstances indicate otherwise, all implied warranties,
but not the warranty under Section 401 [not violating another’s copyright
etc.], are disclaimed by expressions like “as is” or “with
all faults” or other language that in common understanding calls the
licensee’s attention to the disclaimer of warranties and makes plain
that there are no implied warranties. . . .
(e) An implied warranty may also be disclaimed or modified by course of performance,
course of dealing, or usage of trade. . . .”
ii. “(UCITA) SECTION 112. MANIFESTING ASSENT; OPPORTUNITY
TO REVIEW.
(a) A person manifests assent to a record or term if the person, acting with
knowledge of, or after having an opportunity to review the record [Does
not say “review the record before paying”. Review can
occur at any time.]or term or a copy of it:
(1) authenticates the record or term with intent to adopt or accept it
. . .
SECTION 113. OPPORTUNITY TO REVIEW.
(a) [Manner of Availability; Generally] A person has an opportunity to review
a record or term only if it is made available in a manner that ought to call
it to the attention of a reasonable person and permit review. . .
(c) [When Right of Return Required] If a record or term is available for review
only after a person becomes obligated to pay or begins its performance,
the person has an opportunity to review only if it has a right to a return
if it rejects the record [Note: No requirement that the review occur
before payment, in fact a recognition that it does not have to.]
. . . “
iii. “USED MOTOR VEHICLE TRADE REGULATION RULE”
-- 16 C.F.R. Part 455
iv. “(UCITA) SECTION 102. DEFINITIONS.
(a) In this [Act]: . . .
(53) “Receipt” means:
(A) with respect to a copy, taking delivery; or
(B) with respect to a notice:
(i) coming to a person’s attention; or
(ii) being delivered to and available at a location or system
designated by agreement for that purpose or, in the absence of
an agreed location or system:
(I) being delivered at the person’s residence, or the person’s
place of business through which the contract was made, or at any other
place held out by the person as a place for receipt of communications
of the kind; or
(II) in the case of an electronic notice, coming into existence in an
information processing system or at an address in that system in a form
capable of being processed by or perceived from a system of that type
by a recipient, if the recipient uses, or otherwise has designated or
holds out, that place or system for receipt of notices of the kind to
be given and the sender does not know that the notice cannot be accessed
from that place.”
v. “(UCITA) SECTION 304. CONTINUING CONTRACTUAL TERMS.
. . .
(b) If a contract provides that terms may be changed as to future performances
by compliance with a described procedure, a change proposed in good faith
pursuant to that procedure becomes part of the contract if the procedure:
(1) reasonably notifies the other party of the change; and
(2) in a mass-market transaction, permits the other party to terminate the
contract as to future performance if the change alters a material term and
the party in good faith determines that the modification is unacceptable.
(c) The parties by agreement may determine the standards for reasonable notice
unless the agreed standards are manifestly unreasonable in light of
the commercial circumstances.”
UCITA's official comment to this section states: "Posting at an agreed
location designated for that purpose would
ordinarily suffice as commercially reasonable notification." Thus, if
the vendor's clickwrap agreement or standard form agreement specifies that
the current version of the contract, including any changes made from time
to time, will be posted in a certain part of the vendor's website, the consumer
will not even have to be given affirmative notice that any change has been
made..
vi. “(UCITA) SECTION 110. CONTRACTUAL CHOICE OF FORUM.
“(a) The parties in their agreement may choose an exclusive judicial
forum unless the choice is unreasonable or unjust.”
The unreasonable or unjust language is very weak.. The “Official
Comment” to UCITA says the term is unenforceable only,
“[I]f it has no valid commercial purpose and has severe and unfair
affects on the other party. This precludes enforcement of forum selection
clauses that choose a forum solely to defeat the other party’s ability
to contest disputes. Such terms may be unreasonable in that they have no
commercial purpose or justification and their impact may be unjust in that
the term unfairly harms the other party. On the other hand, a contractual
choice of forum based on a valid commercial purpose is not invalid simply
because it adversely effects one party, even in cases where bargaining power
is unequal. The burden of establishing that the clause fails lies with the
party asserting its invalidity.”
vii. UCITA section 102(a) (20) says “‘contractual
use restriction’ means an enforceable restriction created by contract
which concerns the use or disclosure of, or access to licensed information or
informational rights, including a limitation on scope or manner of use.
[Emphasis added.]”
Section 307(b) states that “If a license expressly limits use of the
information or informational rights, use in any other manner is a
breach of contract. [Emphasis added]” A breach of contract
is obviously a grounds for a law suit.
“(UCITA) SECTION 105. RELATION TO FEDERAL LAW; FUNDAMENTAL PUBLIC POLICY;
TRANSACTIONS SUBJECT TO OTHER STATE LAW. . . .
(b) If a term of a contract violates a fundamental public policy,
the court may refuse to enforce the contract, may
enforce the remainder of the contract without the impermissible term, or so
limit the application of the impermissible term as to avoid any result contrary
to public policy, in each case, to the extent that the interest in enforcement
is clearly outweighed by a public policy against enforcement of the term.
. .” .”
viii. “(c) [Lawful Public Comment Not Prohibited]
In a transaction in which a copy of computer information in its final form is
made generally available, a term of a contract is unenforceable to the extent
that the term prohibits an end-user licensee from engaging
in otherwise lawful public discussion relating to the computer information.
However, this subsection does not preclude enforcement of a term that establishes
or enforces rights under trade secret, trademark, defamation, commercial disparagement,
or other laws. This subsection does not alter the applicability of subsection
(b) to any term not rendered unenforceable under this subsection.”
Notealso that “generally available”
may mean that software with negotiated site by site licenses cannot be reviewed.
This affects consumers indirectly by impending competition in the economy generally.
ix. (UCITA) SECTION 105. RELATION TO FEDERAL LAW; FUNDAMENTAL
PUBLIC POLICY; TRANSACTIONS SUBJECT TO OTHER STATE LAW. . . .
“An end user is a licensee that intends to use the information or informational
rights in its own business or personal affairs. An end user is not engaged
in reselling, distributing, sublicensing, commercial public performances of
the information, or otherwise making the information commercially available
to third parties, directly or indirectly.” Comment 39 to §102.
and NCLC