1. Background and Policy. Article 2B warranties blend three different legal traditions. One stems from Article 2 and focuses on the quality of the product. This centers on the result delivered: a product that conforms to ordinary standards for products of that type. The second stems from common law, including cases on licenses, services contracts and information contracts. This tradition focuses on how a contract is performed, the process rather than the result. The transferor's obligations are to perform in a reasonably careful and workmanlike manner. See Data Processing Services, Inc. v. LH Smith Oil Corp., 492 N.E.2d 314 (Ind. Ct. App. 1986). The third comes from contracts for informational content and, in many states, services contracts. See, e.g., ; Snyder v. ISC Alloys, Ltd, 772 F.Supp. 244 (W. D. Pa. 1991); Daniel v. Dow Jones & Co., Inc., 520 N.Y.S.2d 334 (NY City Ct. 1987). It disallows implied warranties and implied obligations of accuracy in information transferred other than in a special relationship of reliance. See Milau Associates v. North Avenue Development Corp., 42 N.Y.2d 482, 398 N.Y.S.2d 882, 368 N.E.2d 1247 (N.Y. 1977).

Current case law selects the applicable rule in part based on a court's characterizations about whether a transaction involves goods or not. That distinction is not reliable. It is unnecessary and unworkable in Article 2B. In this and the following Section, Article 2B distinctions are drawn between computer programs, on the one hand, to which an implied warranty of result is applied, and information or services, on the other hand, to which a process warranty applies. The policy is that qualitative warranties focused on result and merchantability concepts are appropriate for information that most closely resemble functional products - computer programs. Within that category of information products, a further distinction is drawn between mass-market and other types of computer programs.

2. Expanded Application. Since this Section applies to all computer programs provided to a licensee by a merchant with reference to the particular type of program, it expands the scope of the quality warranty by including cases where under current law the transaction is a services contract with no warranties or with warranties limited to making a reasonable effort. See, e.g.,, Micro-Managers, Inc. v. Gregory, 147 Wis.2d 500, 434 N.W.2d 97 (Wisc. App. 1988); Data Processing Services, Inc. v. LH Smith Oil Corp., 492 N.E.2d 314 (Ind. Ct. App. 1986).

The warranty does not apply if the contract is for processing, analysis or other services and the licensor merely uses a computer program in its own activities. The warranty applies to cases where the program itself is the subject matter of the agreement.

3. Dual Application. The implied warranty in this Section and the warranty in Section 2B-404 may both apply to the same transaction and the same information product (e.g., an encyclopedia). The one would apply to the program and its functions, while the other would apply to the accuracy of data provided to the end user.

4. Merchantability. Mass-market transactions in computer programs involving a licensor who is a merchant in programs of the type contain an implied warranty of merchantability. In the mass market, the idea of comparing a particular program to other mass market programs of similar type. The merchantability warranty generally corresponds to original Article 2, except where the difference between software and goods requires a difference in the formulation of the definition.

Since most modern agreements disclaim the warranty of merchantability, there are very few reported commercial cases involving merchantability in any industry, including the software industry. Merchantability standards ask what are normal characteristics of ordinary products of the type.

This Section limits the implied warranty to programs provided by a merchant in computer programs of the kind. This is not made by the casual provider of computer programs.