Uniform Computer Information Transactions Act [U.C.I.T.A.]: The Consumer s Perspective

• Author: David A. Szwak
• Position: Attorney and partner with the Shreveport, Louisiana based law firm of Bodenheimer, Jones, Szwak & Winchell
• Pages: 27-51

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David A. Szwak is an attorney and partner with the Shreveport, Louisiana based law firm of Bodenheimer, Jones, Szwak & Winchell, LLP. He is a member of the Louisiana State Law Institute panel commissioned to study U.C.I.T.A. Mr. Szwak is a 1991 graduate of Paul M. Hebert Law Center, LSU. He has authored three prior law review articles, two of which appear in Louisiana Law Review volumes and the third in The John Marshall Journal of Computer & Information Law, The John Marshall Law School.

I Introduction

While many groups express outrage at the substance of U.C.I.T.A.,¹ the most significant group to feel its adverse effects is the collective consumer population. U.C.I.T.A. was originally drafted in anticipation of becoming Article 2B of the Uniform Commercial Code. For that to happen required the approval of the final text by the American Law Institute (ALI). However, the ALI refused to approve U.C.I.T.A. thereby preventing U.C.I.T.A. from becoming part of the Uniform Commercial Code.² Following ALI's refusal to approve U.C.I.T.A., the National Conference of Commissioners on Uniform State Laws (NCCUSL) decided to forge ahead, attempting to gain passage on a state-by-state basis.³

There has been strong opposition to U.C.I.T.A. from its inception.⁴ One-half of the states' attorneys generals signed a Page 28 petition opposing U.C.I.T.A.⁵ The Federal Trade Commission's Bureau of Consumer Protection has openly opposed U.C.I.T.A., as it violates multiple F.T.C. regulations that protect consumers.⁶ It is widely acknowledged that U.C.I.T.A. authorizes adhesive contracts.⁷With all this opposition, one must wonder who supports U.C.I.T.A.? The three principal U.C.I.T.A. lobby groups are Digital Commerce Coalition (DCC), Information Technology Association of America (ITAA), and Business Software Coalition (BSC).⁸ The list of members funding these lobby groups reads like a "who's who" of the software and online community.⁹ Each of these entities stands to profit greatly if U.C.I.T.A. becomes law.

The potential harm that U.C.I.T.A. stands to cause the average American consumer far exceeds its impact on commercial groups. As currently written, U.C.I.T.A. must be fought, adopting a "bomb shelter"¹⁰ provision, if necessary, to prevent implementation of Page 29 U.C.I.T.A. in Louisiana. Other states are effectively enacting such "bomb shelter" provisions to prevent U.C.I.T.A. from becoming law in those jurisdictions. Following is a discussion of some of the more offensive aspects of U.C.I.T.A. and their implications for Louisiana consumers.

II Post-Sale Disclosure Of Terms

U.C.I.T.A. was designed to validate post-payment and post-sale disclosure of terms.¹¹ In Louisiana, a sale is perfected by an agreement or "meeting of the minds" as to a lawful object, "cause," consent and the parties' capacity to contract.¹² U.C.I.T.A. effectively defeats the "consent" of the parties by permitting the vendor to impose additional terms on the consumer after the sale is completed and payment made.¹³ The post transaction imposition of additional terms, such as arbitration, choice of law, choice of forum, consent to personal jurisdiction for example, is an unsavory business practice and subject to widespread abuse. None of these terms need appear in the advertisement, on the package, or on the web page from which a sale is transacted. Under Louisiana law, this practice might be construed as a counter-offer or an impermissible attempt to add conditions after the sale.¹⁴ Failure to disclose such proposed Page 30 terms in advance precludes the transaction being a conditional sale.¹⁵

Post-payment and post-sale addition of terms will hinder the development of electronic commerce in Louisiana.¹⁶ In this age of growth in online activity and where the benefits of online commerce are being realized, it is important to resist attempts by special interests, like the software¹⁷ manufacturing industry, to introduce laws which do more to harm commerce than they do to promote commerce. U.C.I.T.A. effectively prevents comparative shopping because the consumer is unaware of the seller's terms until after the transaction is completed. Comparative shopping is one of the strongest benefits afforded by online shopping. A consumer should be able to easily and quickly visit competing sites and decide, based upon the disclosures, which product they want and what terms apply. Louisiana law has never permitted post-sale terms to be added, a practice that is particularly offensive in the consumer setting.

Other post-sale and post-payment disclosures such as limitation of warranty, disclaimers, transfer restrictions and comment and criticism restrictions are also built into these add-on terms.¹⁸ License provisions frequently limit the number of users and the length of time that the product may be used. It is easy to understand why the software industry seeks to hide these post-sale and post-payment provisions in convenient shrink-wrap¹⁹ and click-wrap²⁰ packages. Page 31 It is very likely that such onerous conditions would be a factor in the decision to buy if they were made pre-sale or pre-payment.

The post-sale and post-payment imposition of "criticism and comparison" restrictions prevents trade journalists from publishing objective reviews of products and their licenses, and limits their ability to compare competing products and present criticism or commentary on competitive vendors and their products to potential consumers. This is particularly important when new software or products with embedded software are first introduced into the market. The non-criticism term restricts the free exchange of information about products and limits the ability of consumers to make informed decisions about competing goods.

III Mouse Click Consent

U.C.I.T.A. validates buyer consent manifested by mouse-click alone. This form of "fictional assent" assumes capacity and the identity of the buyer. Consumers often purchase products with software previously installed. For example, automobiles, computers, televisions, cameras, security systems and many other common products are all affected by this fictional assent. The product assembler, software installer and secondary programmers are not capable of providing consent to contract terms on behalf of a subsequent third party buyer of the finished product. Again, these post-sale and post-payment terms are not even known by the consumer (purchaser). In their ordinary process, the assemblers, installer and programmers prepare the product for consumer-friendly Page 32 use. These workers are employed by the intermediate manufacturer and retail vendors. Occasionally they are employed or contracted by the end user or consumer. In either case, the end user is not aware of the restrictions assented to by the various intermediaries.

Worse yet, U.C.I.T.A. allows the software manufacturer to define conduct as assent for future transactions. For example, a term might provide that assent by mouse-click upon setting up your computer at home would provide assent to the terms of any future updated or revised versions of the software which might be provided later. That software license might impose even more and, surely, creative terms generally favoring the software manufacturer. U.C.I.T.A. does not even require that the new terms and conditions be reasonable. Further, U.C.I.T.A. does not require that the consumer or other purchaser reasonably expect the addition of new terms and conditions.

IV Preclusion Of Consumer Law Benefits

There is some doubt about whether U.C.I.T.A. will prevent courts from applying consumer protection laws. Proponents of U.C.I.T.A. argue that software transactions normally covered by goods-related consumer protection laws would lose that protection. U.C.I.T.A. classifies consumer software contracts as a license of computer information, not the sale of goods.²¹ Prior to the introduction of U.C.I.T.A., American courts treated software transactions with consumers to be sales of goods, not a license or sale of services.²² It is easy to understand that consumers consider the purchase of software to be that of a product or "good," and not a license.²³

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U.C.I.T.A. conflicts with the existing legal framework governing software sales. It will affect the scope of consumer protection laws that have not been amended to harmonize with U.C.I.T.A.'s new "vendor friendly" provisions. Will laws like the federal Magnuson- Moss Warranty Act, which incorporates state law features, apply now to software transactions? Will deceptive trade practice statutes apply to these transactions? Will federal and state anti-deception statutes apply? Clearly, U.C.I.T.A. promotes deferring disclosure of terms until after the sale transaction is nominally complete. U.C.I.T.A. thus favors the software industry with a unique set of rules regarding contract formation. Other industries, especially in consumer sales, are required to provide early notice of key terms and conditions. These terms and conditions are to be prominently displayed and brought to the consumer's attention.²⁴ Further, in some cases, special language and...