Article 2b

.. consequences. Software is routinely released with many serious, known defects because companies seek short-term profits, while sacrificing long-term customer satisfaction, to meet ship dates. Companies fear being exploited by the competition if knowledge of the defects was released. A software defect is a material breach of the contract for sale or license of the software if it is so serious that the customer can justifiably demand a fix, cancel the contract, return the software, and demand a refund.

If the defect is not material, then the customer is probably stuck with the program, and entitled to at most, a partial refund. Article 2B will make it easier for software publishers to refuse a refund. If you buy software that is not mass-market, then you no longer have the right to reject the product due to non-material defects that you discover during inspection. Also, the publisher is only required to give a refund if the product is so defective that it has materially breached the contract. But even for a significant bug, the company can force a customer to prove in court that the bug is so serious that the customer is entitled to a full refund instead of a partial refund. If the contract is for a mass-market license, then a breach is only material if the software fails to perform in conformance with the end user documentation, or if the softwares performance is unreasonable and as a result, it deprives the consumer of a significant benefit of the product or it results in costs to the consumer that exceed the price paid for the software. Article 2B requires the customer to maintain backup systems just in case the software publisher breaches the contract.

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The customer cannot recover compensation for losses that could have been avoided with regular backups. The customer should not have to spend time, effort and money on preventive steps, before a breach, to minimize the damages that will be incurred if the publisher should happen to breach. Sellers rely on contracts and laws that make it harder for customers to sue them. In mass-market agreements, we already see clauses that avoid all warranties and that eliminate liability even for significant losses caused by a defect that the publisher knew about when it shipped the product. The seller isnt required to deliver a perfect program, just one that substantially does what was promised.

The Article requires the seller to fix a nonconformity that is not material or very serious. This effort to cure is only required with products other than mass-market licenses. It is easy for the mass-market software publisher to escape liability for incidental and consequential damages. Under 2B, a nonmaterial breach does not entitle the customer to cancel the contract and get a refund, but it does entitle the aggrieved party to the appropriate remedies including incidental and consequential damages, however, 2B also allows the seller to exclude these damages. A software developer can be sued under certain theories. Negligence is what first comes to mind in lawsuits over defective products, but proof of negligence can be very difficult.

You must ask if the company had actual knowledge of the problem. How carefully did the company perform its safety analysis? How well designed is the program for error handling and how well does the company handle customer complaints? You need to look at whether or not the product design and development followed industry standards. Failure to follow a standard is only relevant if the plaintiff can show that this failure caused the harm. Does the company have a bug tracking method and did they use a consistent methodology? Did the company make a serious effort to find errors and what test plan did it follow. Does the documentation for the software warn people of risks? Most software lawsuits are for breach of contract or fraud because the product usually doesnt cause personal injury or property damage. Fraud would apply if the company made a statement of fact to the customer and the company knew when it made the statement that it was false. If you reasonably relied on the statement to determine buying or returning the product, it can be classified as fraud.

If the company made a mistake and did not know that the statement was false when it made it, then this would be negligent misrepresentation. In a software transaction, a material breach or failure to meet specifications is grounds for a lawsuit. The law will sometimes fail to compensate buyers of products that are seriously defective. The proposed article would let companies simply disclaim any liability for defects or lost data beyond the purchase price of the software itself. Consumers need protection from the laws, not proposals like this one that will safeguard software companies from liability. Article 2B reduces liability rather than expanding it. Software publishers are given more power to set their terms than in current law.

If UCC 2B is enacted, your could potentially lose your rights to criticize or analyze the product you purchased. It allows publishers to use confidentiality clauses in their license agreements. They can have you agree to hold the software package and not publish, communicate, or disclose to third parties any part of the package, without written consent. Publishers have the right to create trade secrets and to enter into nondisclosure contracts with people. The publisher is in essence, creating a nondisclosure agreement with the whole world, one consumer at a time. This is a law that lets publishers cut off their customers right to read detailed, critical reviews of a product they are considering buying. Competition in the marketplace is then decreased if publishers can block negative reviews of their products.

Software development companies will benefit from laws that shield sellers from the consequences of their actions which in turn strips away most of the rights of customers who purchase mass-market products. Consumers are aware that software makers need a viable market and some form of shrink-wrap licenses might be necessary. But software makers have taken advantage of these buyers. If we have to accept a unilateral license, the least the software publishers can do is provide reasonable consumer protections. Many consumer demands may have been met, but others have not. The proposed draft is unbalanced because it favors software vendors at the expense of consumers on many issues.

Software companies can avoid paying any damages beyond a refund, even for defects that they knew about when they released the software. This includes damages done to the customers computer, charges for technical assistance which sometimes exceed the cost of the software itself and time to re-enter data that was destroyed. All the financial benefit goes to the company, and all risks that the software will not perform or actually cause serious damage are placed solely on the purchasers of the product. Software companies can disclaim all warranties, denying even that the product conforms to claims made on its packaging or in its documentation. For software bought or licensed online, software publishers can avoid all liability for viruses in their software, even if they would have found the virus with the simplest of tests. Article 2B even makes any license term binding, even if it would cause an ordinary and reasonable person to refuse the license if that party knew that the license contained the particular term, so long as the person clicks on I Agree for that term.

The proposed draft provides almost no protection to customers. It shields the worst companies from responsibility for their worst products. It will weaken the legal rights of consumers and ultimately drag down software quality across the industry. If this addition to the Uniform Commercial Code is passed, you could be giving up a lot more than you intended for with that click. Bibliography BIBLIOGRAPHY 1. Eisenberg, Rebecca L.

2B or not 2B. 2. Hoffman, Thomas. Users Could Be Losers Under Code Revision. 3. Kaner, Cem.

Bad SoftwareWho is Liable?. 4. Kaner, Cem. What Is a Serious Bug? Defining material Breach of a Software License Agreement. 5. Kaner, Cem. Uniform Commercial Code Article 2B: A New Law of Software Quality.

6. Leibowitz, Wendy R. In New UCC Software Contracts, Is the Customer Always Wrong?. 7. McWilliams, Brian.

The End of Software Licenses?. 8. Nader, Ralph. Shrinkwrap Licenses and Uniform Commercial Code Article 2B. 9. Ring, Jr., Carlyle C.

Positive Attributes of Article 2B. 10. Towle, Holly K. Towle Memorandum UCC Article 2B. 11.

Wylie, Margie. Shrink-wrapping the Social Contract. Legal Issues.