If you have engaged in an online transaction, either as a consumer or an online provider, you are probably aware that buying or selling something via the Internet is somewhat akin to the experience of Jimmy Stewart's character in The Man Who Shot Liberty Valance - a lawless society just waiting to be tamed by someone accustomed to law and order. Like Jimmy Stewart, the legal profession, with its thirst for order, clarity and consistency (isn't that your view of attorneys?), is riding upon its steed ready to do what it can to bring some order to the Internet chaos. As a result of the legal profession's efforts, the National Conference of Commissioners on Uniform State Laws helped develop the Uniform Computer Information Transactions Act (UCITA).

Like other uniform laws (you are probably familiar with the most famous of these, the Uniform Commercial Code, generally known as the UCC), the UCITA is designed with the hope that e-commerce regulation can be uniformly applied across the country. If adopted by every state legislature in the United States, suppliers in New Jersey would be governed by the same rules as suppliers in New York, Michigan or Arizona. The UCITA draft legislation has already been adopted in Maryland and Virginia, and has recently been introduced in several other states.

Once adopted, the UCITA will govern e-commerce in that state. Most notably, the UCITA will: 

• Govern licensing agreements of software and other intellectual property; 
• Standardize the enforcement of software licensing agreements in "shrink-wrap" and "click-wrap" forms. (Software packages contain shrink-wrap licenses that consumers agree to upon opening the package. Click-wrap licenses are their electronic equivalent); 
• Give sellers the ability to ensure that the software is being used as licensed; 
• Protect the buyer through certain implied warranties;
• Establish standards for the quality of software products so that both sides have common expectations; 
• Create rules for choosing the applicable state law and jurisdiction when the parties are in different states; and 
• Set up ground rules for recognizing and authenticating electronic records

Of particular interest to those engaging in e-commerce is the UCITA's formal recognition of electronic records, setting concrete legal rules for sending and receiving information over the Internet. Upon passage of this legislation, two parties entering into a contract via electronic means will have a common understanding of the "rules of the game," and the legal significance of their actions. Under the rules of the UCITA an electronic message is deemed "received" by the addressee when it arrives in his or her electronic mailbox, even if it remains unread or is accidentally deleted. The UCITA also recognizes the legality of digital and electronic signatures.

Whether the rules set forth in the UCITA are right or wrong, whether they are pro-industry or pro-consumer is, in many ways, less important than the fact that, once the UCITA is adopted by each state, there will be rules that all will be able to learn and of which all be aware. But what is most important, as always in business, is that uncertainty will be removed (or at least substantially narrowed). A buyer and a seller, or a licensee and a licensor, will know the risks of a particular e-commerce transaction and their rights. They can then price their transaction accordingly. As more states sign on to the UCITA, cyberspace and the electronic universe will finally become a much more orderly place and we can get back to doing business, with a new and better understanding of the e-commerce game.

"This article is prepared by Miller & Mitchell, P.C. We do not recommend acting on the information contained in this article without obtaining specific professional advice. These articles focus on broadly applicable legal principles. Contact Miller & Mitchell, P.C. for legal counsel."

For more information about e-commerce and other workplace technology issues, contact Miller & Mitchell, P.C. rmiller@millermitchell.com

© 2001 Miller & Mitchell, PC All Rights Reserved.

Click here to contact Miller & Mitchell