Developing Seen 19.11.10

7/30/2019 Developing Seen 19.11.10

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Developing Laws in Electronic Commerce -

What Every Purchaser Should Know

Presented by:

Martin J. Carrara, J.D., C.P.M.

& Christine A. Haberle, J.D.

NAPM 85TH ANNUALINTERNATIONAL PURCHASING CONFERENCE

May 1, 2000


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WHAT IS ELECTRONIC COMMERCE?

Use of Electronic Data Interchange (EDI)

Use of E-mail

Internet buying

Downloading software

On-line bidding and electronic auctions

Knowledge agents

Other examples


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CONSIDER THESE HYPOTHETICALS

You send an email message to a supplier stating that you accept

its offer contained in an email the supplier had previously sentto you

You purchase an off-the-shelf software application that contains

terms and conditions in the box You place an order over the Internet by completing an on-line

order form on the suppliers website

Your computer places an order automatically following pre-programmed instructions

Which of these interactions result in binding agreements?

What are the terms of the resulting agreement?


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WHY ARE NEW LAWS NECESSARY?

Contract Formation Issues:

Mutual Assent

Offer and Acceptance

Statute of Frauds Writing requirement

Signature requirement

Purchase of Goods vs. License of Software


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EMERGING LAWS AFFECTING

ELECTRONIC COMMERCE

Case Law

Enforceability of shrink-wrap agreements ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996)

Enforceability of click-wrap agreements

Hotmail Corp. v. Van$ Money Pie,

47 U.S.P.Q. 2d 1020 (N.D. Cal.1998) Storm Impact v. Software of the Month Club,

13 F. Supp. 2d 782 (N.D. Ill. 1998)

America Online v. LGGM, Inc.,

1998 U.S. Dist. LEXIS 20144 (E.D. Va. 1998)

Uniform Electronic Transactions Act (UETA)

Uniform Computer Information Transactions Act (UCITA)

Digital Signature Statutes


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UNIFORM ELECTRONIC TRANSACTIONS

ACT (UETA)

Adopted by the National Conference of Commissioners on

Uniform State Laws (NCCUSL) on July 29, 1999

UETA is designed to support the use of electronic

commerce by establishing the equivalence of: electronic records with paper writings

electronic signatures with hand-written signatures

UETA is a Procedural statute; the basic general and

statutory rules of contract law continue to apply


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SCOPE OF UETA

UETA applies to electronic records and signatures in the

business, commercial or government contract setting (3(a))

Parties must agree (in writing, via conduct etc.) to conduct

one or more transactions using electronic communications( 5(b))

Relationship" agreementparties agree that all or a portion of

transactions will be done electronically

UETA is preempted by:

UCC (but not Article 2)

UCITA (narrower scope than UETA)


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RECOGNITION OF ELECTRONIC RECORDS

AND SIGNATURES UNDER UETA

Definitions:

"Record" means information that is inscribed on a tangible

medium or that is stored in an electronic or other medium and is

retrievable in perceivable form ( 2(13))

"Electronic record" means a record created, generated, sent,

communicated, received, or stored by electronic means ( 2(7))

"Electronic signature" means an electronic sound, symbol, orprocess attached to or logically associated with a record and

executed or adopted by a person with the intent to sign the record

( 2(8))


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RECOGNITION OF ELECTRONIC RECORDS

AND SIGNATURES - CONTINUED

Record or signature not denied legal effect or

enforceability because in electronic form ( 7(a))

Contract not denied legal effect or enforceability because

electronic record used in its formation ( 7(b))

If law requires writing, electronic record sufficient ( 7(c))

If law requires signature, electronic signature sufficient( 7(d))


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ATTRIBUTION OF ELECTRONIC RECORDS

AND ELECTRONIC SIGNATURES

Attribution of electronic records and electronic signatures:

An electronic record or electronic signature is attributable to a

person if it was the act of the person. The act of the person may be

shown in any manner, including a showing of the efficacy of any

security procedure applied to determine the person to which the

electronic record or electronic signature was attributable.

( 9(a))

Electronic Agents/Automated Transactions ( 2(6)) Transactions controlled by electronic means without human

intervention


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OTHER KEY UETA PROVISIONS

Admissibility in Evidence ( 13)

Evidence of record/signature will not be excluded solely becausein electronic form

Retention of Electronic Records ( 12)

Electronic record satisfies record retention requirement

Requirement to Provide Information in Writing ( 8(a))

Information can be provided, sent or delivered electronically if theinformation is capable of retention


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STATUS OF UETA

(AS OF APRIL 14, 2000)

State adoptions

- California

- Indiana

- Kentucky

- Nebraska

- Pennsylvania

- South Dakota

- Utah

Introductions in 2000

- Alabama - Kansas

- Arizona - Maryland

- Colorado - Minnesota

- Delaware - Ohio- DC - Oklahoma

- Florida - Rhode Island

- Hawaii - Vermont- Idaho - Virginia

- Iowa - West Virginia


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UNIFORM COMPUTER INFORMATION

TRANSACTION ACT (UCITA)

Formerly known as Proposed UCC Article 2B

Adopted by National Conference of Commissioners on

Uniform State Laws (NCCUSL) on July 29, 1999

Scope of UCITA: Applies substantive law to computer information transactions

( 103(a))

Agreements to create, modify, transfer or license computerinformation or informational rights in computer information

E.g., contracts to license or buy software; create computer

programs, on-line access to databases; and distribute information

over the Internet


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CONTRACT FORMATION UNDER UCITA

Manifesting Assent

Examine surrounding circumstances

Opportunity to Review Terms ( 112(e))

Authentication and the Signature Requirement ( 102(6))

Must have intent to sign record

Records and the Writing Requirement ( 201) Statute of Frauds: requires writing for contracts requiring payment

of $5,000 or more


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CERTAIN KEY UCITA PROVISIONS

Default rules for when parties do not deal with a matter in

their contracts for computer information transactions

Opt in/Opt Out ( 103(e))

Parties can choose whether UCITA will govern the transaction, in

whole or in part

Relationship with Federal law (preemption)

State consumer protection statutes and regulations notaltered; they control over UCITA ( 105(c))

Choice of Law/Forum Provisions ( 109, 110)


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CONTRACT PERFORMANCE

Perfect Tender vs. Material Breach of Substantial

Performance ( 601))


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STATUTE OF LIMITATIONS ( 805)

One year after right of action accrues or one year after

breach was/should have been discovered.

In non-consumer contracts, can reduce statute of

limitations period to one year but cannot extend it.


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MASS MARKET/SHRINKWRAP LICENSES

Mass market licenses

Shrinkwrap licenses

Enforceable under UCITA with certain limitations.


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WARRANTIES UNDER UCITA

Express Warranty ( 402)

Affirmation of fact, promise or description.

Implied Warranty of Non-Infringement & Quiet

Enjoyment ( 401)

Implied Warranty of Merchantability of a Computer

Program ( 403)

End user vs. distributor

Implied Warranty of Fitness for Licensees Particular

Purpose; System Integration ( 405)

Implied Warranty of Data Accuracy ( 404)


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WARRANTY DISCLAIMERS

Course of performance or usage or trade

Must be conspicuous for:

Implied Warranty of Merchantability of a Computer Program

Implied Warranty of Fitness for Licensees Particular Purpose;System Integration


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STATUS OF UCITA

(AS OF APRIL 14, 2000)

State adoptions

- Virginia

Introductions in 2000

- Delaware

- District of Columbia

- Hawaii

- Illinois

- Maryland

- Oklahoma


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OTHER LAWS AFFECTING ELECTRONIC

COMMERCE

Pending Federal Laws

The Third Millenium Electronic Commerce Act

The Electronic Signatures in Global and National Commerce Act

Electronic Signature vs. Digital Signature

Digital signature: one type of electronic signature that utilizes a

specific technology (e.g., dual key cryptography)

Revisions to UCC Article 2 - Sales March 2000 is latest NCCUSL draft; not yet adopted


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RELEVANT WEB SITES

UCITA:

UETA:

Revised UCC Article 2:

NCCUSL:

Developing Seen 19.11.10

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