Legal Issues

Question 1  Pre-UCC and the Commerce Clause of the United States Constitution
American contract law has long been complicated by its federal nature.  More specifically, because the federal government and the fifty state governments all have the power to legislate with respect to contracts and commercial transactions, there have been many circumstances in which laws conflict.  These contract law conflicts are important because they increase business risks and they inhibit the more pervasive expansion of commercial relationships because of inconsistent or uncertain types of laws governing contractual arrangements.  The main policy objective underlying the Uniform Commercial Code, specifically related to the application of contract law to the sale of goods in a federal system, was the creation of legal uniformity in ways that promoted commerce and which increased business confidence.  Prior to the creation of the Uniform Commercial Code, however, the regulation of interstate commerce in Americas federal system was primarily controlled and informed by the Commerce Clause of the United States Constitution.  Generally speaking, problems arose in an interstate business context with respect to contractual agreements and consequences because Many constitutional provisions are vague, like the commerce clause. Saying that Congress may regulate commerce among the several states just doesnt tell us whether the local sale of barbecue is included in Congresss interstate commerce power HYPERLINK httpwww.questiaschool.comPM.qstaod62565752(Feinman, 2000, p. 19).  The problem was that contractual agreements needed more specificity, the Uniform Commercial Code was designed to provide more specificity in a uniform manner, and the Commerce Clause became less relevant as states voted on and adopted the Uniform Commercial Code with certain variations.

Question 2  UCC Article 2 and UCITA Differences
It is important to note that the Uniform Computer Information Transactions Act is not intended to supersede Article 2 of the Uniform Commercial Code quite the contrary it is intended to deal with a specific type of commercial transaction in ways that recognize the differences between commercial transactions involving the sale of goods and the licensing involved in a variety of different computer-related transactions.  The first major difference is that the UCITA is designed to deal with commercial transactions involved with licensing contracts rather than an outright sale of goods.  The precise rights covered by the contracts are therefore different in several respects.  Other major differences include the fact that the UCITA, because of its coverage of information as opposed to goods, implicates some unique free speech issues and that the UCITA must attempt to harmonize unique demands by the industry and the consumers (Jaspen, 1999).  Specifically, the UCITA is designed to regulate a slightly different type of industry in which small companies make up an important part of the industry and in which consumers are more dependent on technologies that promise transparency.  In sum, although they have similar goals in terms of uniformity, these two legislative regimes are quite different in several respects.

Question 3  Sale of Goods versus License
As a general rule, the sale of goods involves the transfer of all ownership rights whereas the license envisions the transfer of certain uses without conveying full ownership in the underlying property.  It is certainly true that the sale of goods may involve certain contractual conditions, such as security interests dependent on the payment of a debt related to the goods, but in general the sale of goods involves a transfer of all rights to the underlying property.  On the other hand, and what the UCITA addresses, A license is, simply stated, permission to do something the granting party (the licensor) has the right to otherwise prohibit HYPERLINK httpwww.questiaschool.comPM.qstaod113555031(Poltorak  Lerner, 2004, p. 1).  The grantor of a license therefore retains many more legal rights than the grantee of a license.  Although there are some similarities between the sale of goods and the license, the differences are quite significant.  There are also a greater number of rights that can be granted, qualified, and created in the form of a license than is the case with a traditional sale of goods.

Question 4  Reasons for Severing UCITA from the UCC
It would appear that the UCITA was eventually treated as a separate uniform law because its provisions could not be neatly harmonized with the provisions of Article 2 of the UCC.  The differences, as have been previously mentioned in this paper, are such that computer information transactions demanded an entirely separate legislative regime.  Had modifications been made, it seems likely that there would have been immediate and endless litigation and that the policy goals relating to uniformity and business stability would have been defeated.