An Overview of the Uniform Computer Information Transactions Act

An Overview of the Uniform Computer Information Transactions Act

Few would question that the United States economy has shifted into a new era. The Industrial Age, characterized by huge factories and the mass production of goods, has given way to the Information Age, characterized by the dominance of the service sector and exemplified by the explosive growth of the software industry. Commerce on the Internet is no longer a novelty. The trade in information services, combined with electronic commerce for other goods and services, dominate our business news. Most lawyers would agree that advances in technology have pushed beyond the limits of existing jurisprudence. Internet commerce alone raises issues regarding jurisdiction, conflict of laws, and electronic contracting, all of which have the potential for inconsistent treatment by the various states.
 
The National Conference of Commissioners on Uniform State Laws (NCCUSL) has developed a new body of law which addresses many of challenges brought about by the shift in our economy. This new statute, the Uniform Computer Information Transaction Act (UCITA), will provide a framework within which to conduct commerce in the Information Age.
 
The development of UCITA was driven by the realization that the primary body of uniform contract law in this country, the UCC Article 2 model based on the delivery of tangible goods, is ill-suited to address the issues that arise in the information and software industries. Transactions in the information and software industries typically involve a transfer of limited rights to access or use an intangible ''product'' rather than a complete transfer of ownership and physical delivery of a tangible good. For example, the end user typically does not own software outright. Instead, the end user typically receives a license affording the right to use the product but including no right to resell it or to copy and distribute it.
 
Initially, an ABA special committee on software contracts was appointed to work in concert with the Article 2 Drafting Committee. The Article 2 Drafting Committee developed the idea to employ a ''hub and spoke'' model within Article 2. In a redrafted Article 2, the provisions on general contract principals would be the ''hub,'' while separate chapters dealing with issues particular to either goods or to software would form the ''spokes.'' This idea was rejected by the Executive Committee of NCCUSL in July 1995. Instead, a drafting committee was appointed to create a new Article to be named ''2B'' to provide a framework for contracting in the software and information industries. Proposed Article 2B was later renamed UCITA and promulgated as a free standing uniform act rather than as part of the UCC.
 
For more information on the UCITA, see Chapter 42 of Commercial Law and Practice Guide (Matthew Bender & Company, Inc.).