Symposium: The Uniform Commercial Code Proposed Article 2B

Treatment of Consumers Under Proposed U.C.C. Article 2B Licenses


Mary Jo Howard Dively & Donald A. Cohn


VOL. XVI • Winter 1998 • NO. 2 (table of contents)

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16 John Marshall J. of Comp. & Info. Law 315


Various provisions in proposed U.C.C. Article 2B seek to increase the protection that is currently afforded to consumers. Generally, consumer law is made up of a series of default rules which operate in commercial settings. The default rules function in such a way as to free commercial entities from having to contract for every minor detail. However, default rules often function to the detriment of consumers because the consumer is not is a position to negotiate the provisions nor can they appreciate the ramifications of the default provisions.

The purpose of the U.C.C. has been to provide default rules while insuring the right to contract. Article 2B seeks to maintain the purpose of default rules and insure the right to contract while affording the consumer added protection.

Consumers are protected in a number of ways under Article 2B. Article 2B defines a consumer as "an individual who is a licensee of information that at the time of contracting is intended by the individual to be used primarily for personal, family, or household use." Article 2B protects the consumer by allowing the consumer the choice of law, choice of forum, protecting the consumer in cases of electronic error, and a limitation on what is commonly called "hell or high-water clauses."

The second means of protecting consumers is by enhancing the protections afforded to "mass-market transactions." A mass market transaction is defined by Article 2B as "a transaction in a retail market involving information directed to the general public as a whole under substantially the same terms for the same information, and involving an end-user licensee that acquired the information under terms and in a quality consistent with an ordinary transaction." Even though the mass market analysis focuses on the transaction itself, consumers are still provided under Amendment 2B. First, the Drafting Committee voted to permit licensees in mass market transactions to have a right of refund if a mass market contract has been formed with terms and conditions that the licensee did not see prior to the creation of the contract. This provision is aimed at so called "shrink-wrap" licenses. Next, Section 2B-304 provides additional consumer protection in mass-market situations by allowing the licensee to terminate a contract if modification of the contract deals with a material term and the licensee determines that the modification is unacceptable. Third, Article 2B requires that both the computer program and physical medium by which it is delivered to be merchantable. Forth, Article 2B eases the restrictions on the transferability of licenses.

The purpose for doing so is that in the mass market the licenser has chosen not to be concerned about the parties which acquire its product as licensee, but instead has marketed its products to the general public. Finally, Article 2B adopts a substantial performance standard, instead of a perfect tender rule, for acceptance of software.

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