Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
(202) 387-8030;


Uniform Commercial Code Article 2B
Sales of Software and Information

Article 2B is a new section of the UCC that was separated out from Article 2 (goods and services) to address sales of software, information, and other intangibles. The drafting committee has expansively defined 2B's coverage to include software and data bases as well as movies, books, and sales conducted via electronic transactions. A law controlling information sales in the Information Age is extremely important, particularly when it is likely to be adopted in the majority, if not all, the states. The drafting process has been dominated by industry and the current draft of UCC Article 2B is extremely unbalanced against consumer interests. Among a few of the most glaring problems are the following:
-- Assent is manifested by clicking on an icon that says "I Agree" while loading software or making a purchase on a web page.
-- You may manifest assent even if you don't have the terms you "assented" to until a reasonable time after you begin using the service or product.

In sum, Article 2B is really about the triumph of contract (and that term is used loosely here because these are far from bargained for transactions) over federal and state law. Publishers of software and other information products will be creating private legislation in shrinkwrap contracts that modify, if not completely undermine, copyright and other laws.
Here are a couple examples of typical transactions and the consequences for the consumer due to a shrinkwrap license:

1. Typical WWW Information Transaction

While surfing the web you find a software package that you want to purchase. You do so and prior to downloading it you click on the "I Agree" icon assenting to the terms of a 12 page license. You may also be able to view the license prior to download but almost no one does -- it is generally quite lengthy and thick, chock full of legalese. Even many of the lawyers attending the UCC 2B drafting conference admit that they don't read these licenses. In the process you also answer various queries about your operating system, intended business or personal uses, home and business address and phone numbers, yearly income, etc. What have you agreed to? The publisher may impose terms in that license such as:

Some of these terms are explicitly allowed and others are simply not prohibited. It is highly likely that consumers will have almost no choice in license terms. Some of the largest publishers may go beyond the basement level protection provided by Article 2B, but most will not. Further, trade associations such as the Software Publishers Association and Business Software Alliance actually provide thousands of members with model shrinkwrap contract forms that disclaim practically everything. Consumers are going to see uniformly almost oppressive license terms.

2. AOL's Recent Debacle

America On Line recently claimed that its license agreement with customers immunized it from suit. The license apparently contains provisions stating that the customer agrees that AOL shall not be liable for service interruptions. These provisions would have been included here but they are available for inspection only after you provide your home and work phone, address, and a credit card number. Whether a court would deem the entire license as valid is very questionable and in consumer transactions the weight of the case law would be against such an outcome. Upon enacting UCC 2B, the AOL license would be effective and the possibility of consumers having any remedy would be diminished, if not eliminated.

3. Dilbert

The author of Dilbert, Scott Adams, recently produced a comic strip addressing the shrinkwrap issue (See Jan. 14, 1997). In the comic, Dilbert did not read the shrinkwrap license in a software package and as a result he unwittingly becomes an indentured servant to Microsoft founder Bill Gates. Some of the shrinkwrap licenses include just about every industry-favorable provision short of indentured servitude. Disclaimers are made for all possible defects, viruses, or malfunctions, and software is often claimed to be sold "as is." While consumers might expect a used car to come "as is," and understand what it means when a sign on the car indicates this, it is a different situation entirely when a shrinkwrap license contains, inside the package which cannot be read until after the purchase, an "as is" term for a brand new software program.

The Dilbert web page also presents a good example of how information may be controlled despite federal copyright laws. Under UCC 2B, the Dilbert web page could require users to click on an icon indicating that they "agree," i.e., manifest their assent, to a license agreement. The license agreement could attempt to restrict what were previously considered fair uses such as making a photocopy of this particular comic and giving it to a colleague. Mr. Adams would probably not impose such a restriction, but the policy implications are obviously of great importance.

Resources and Actions

We are interested in working with interested groups on this issue. It is a particularly difficult process to effect from the inside (CPT has been and will continue attending the drafting conferences) because it is so dominated by industry. In addition, the Reporter of Article 2B has been resistant to passing on comments he receives to the full drafting committee. We suggest that you write directly to Ray Nimmer, The Reporter of UCC 2B. Please copy Todd Paglia ( on your emails and letters. CPT is considering focusing on several leverage points such as press coverage and participation by additional groups and/or formation of a broader coalition of opposition groups. We would welcome any suggestions you might have.

Contact Information

Todd Paglia
Staff Attorney
Consumer Project on Technology
PO Box 19367
Washington, DC 20036
(202) 387-8030