RECENT DEVELOPMENTS IN CONTRACTS AND SALES LAW

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RECENT DEVELOPMENTS IN CONTRACTS AND SALES LAW
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LAW OF CONTRACTS

• COMMON LAW OF CONTRACTS
• UCC - UNIFORM COMMERCIAL CODE
• UCITA UNIFORM COMPUTER INFORMATION TRANSACTIONS
  ACT

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COMMON LAW OF CONTRACTS

• Foundation of US contract law
• State court decisions
• Governs a wide array of contracts services,
  land, business agreements, employment
  consulting

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UNIFORM COMMERCIAL CODE

• ARTICLE 2
• Governs the sale and purchase of goods
• GOODS - tangible personal property
• Includes business and consumer goods

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Common Law and Sales Law under UCC

• Common law- No implied guarantees/warranties of
  performance under the common law
• Sales Law UCC imposes implied warranties of
  merchantability in any sale by merchant and
  warranty of fitness in some sales unless
  disclaimed in the contract

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UCITA UNIFORM CONSUMER INFORMATION TRANSACTIONS
ACT

• Governs computer information transaction
• Defined as an agreement to create, modify,
  transfer, or license computer information or
  rights in computer information

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SOFTWARE AS A SALE OF GOODS?

• Ilan v. Netscout
• Packaged software license considered a sale
• Multi-Tech v. Floreat
• Computer software design and development contract
  not a sale of goods

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MIXED TRANSACTIONS

• Kietzer v. Land OLakes
• Contract for chicken feed and consulting services
  was a sale of goods
• AAF McQuay v. MJC, Inc.
• Contract for application of anti-corrosive
  coating to air conditioner coils was deemed a
  sale of goods

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BATTLE OF THE FORMS

• Whose Terms Govern The Sales Contract
• Affects warranties, remedies and other rights of
  the parties under a sales contract
• Buyers purchase order form often has different
  terms than sellers invoice
• UCC has complicated rule (2-207) to resolve the
  differences

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RECENT CASES

• Commerce Industry v. Bayer Corp.
• Arbitration clause in buyers purchase order did
  not become part of parties contract
• Aceros Prefabricados v. Tradearbed, Inc.
• Arbitration clause in sellers confirmation form
  became part of the parties contract

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Electronic Signature/Contract Laws

• State digital signature laws
• UETA Uniform Electronic Transactions Act
• ESIGN Electronic Signatures in Global and
  National Commerce Act

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UETA UNIFORM ELECTRONIC TRANSACTIONS ACT

• Governs enforceability of electronic signatures
  and electronic contracts
• Makes electronic signatures and contracts on a
  legal par with paper contracts and traditional
  signatures

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ESIGN ELECTRONIC SIGNATURES IN GLOBAL AND
NATIONAL COMMERCE ACT

• Federal Law (2000)
• A signature, contract or other record cannot be
  denied legal effect, validity or enforceability
  solely because it is in electronic form

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ELECTRONIC CONTRACTS

• CLICK AND ACCEPT AGREEMENTS
• Online user must affirmatively agree to the
  terms of use prior to transaction
• BROWSE WRAP AGREEMENTS
• Online user is advised of terms of use on home
  page

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Ilan v. Netscout (2002)

• Parties had Value Added Reseller (VAR) agreement
  under which Ilan resold Netscouts software
• Ilan sent Netscout a purchase order for software
  with upgrade and support terms
• Netscouts software had a clickwrap license
  agreement with different terms
• Ilan sued Netscout for breach of obligation to
  provide upgrades of software

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Ilan v. Netscout (2002)

• Legal issue Does the clickwrap agreement
  override the purchase order terms?
• Court holds that clickwrap and the terms of the
  VAR agreement governed the sale of the software
  to Ilan

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Ticketmaster v. Tickets.com (2000)

• Ticketmaster sells event tickets online
• Tickets.com deeplinks to event pages on
  Ticketmasters site
• Tickets.com sued for breach of Ticketmasters
  browse wrap agreement governing its websites
  terms of use

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Ticketmaster v. Tickets.com (2000)

• Court finds no binding contract because user of
  site was not required to explicitly agree to the
  terms of use, the link to which was at the
  bottom of Ticketmasters home page
• Unless Tickets.com knew of limitations on deep
  linking under terms of use, it had not agreed to
  them