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This is an unofficial draft of Article 2B from April 15, 1998. For the current official version, see the University of Pennsylvania Law School (Official NCCUSL) site at http://www.law.upenn.edu/library/ulc/ulc.htm SECTION 2B-613. ACCEPTANCE OF COPY; EFFECT. (a) Acceptance of a copy occurs when the party to which the copy is tendered: (1) signifies or acts with respect to the copy in a manner that (2) fails to make an effective refusal; (3) acts in a manner that makes compliance with the party's duties after refusal impossible because of commingling; or (4) substantially obtains the benefit or access from the copy and cannot return that benefit or access. (b) Except in cases governed by subsection (a)(3) or (4), if there is a right to inspect (c) If an agreement requires delivery in stages involving separate portions of the whole which taken together comprise the whole, acceptance of any stage is conditional until acceptance of the whole. (d) Acceptance of a copy precludes refusal of the copy and, if made with knowledge of a non Uniform Law Source: Section 2-607(2); Section 2A-515. Revised. Reporter's Notes: 1. Acceptance is the opposite of refusal. As to its effect on remedies, see sections on waiver and general remedies sections. 2. Subsections (a)(1) and (2) conform to the language of Article 2A, clarifying as in Article 2A, that actions as well as communications can signify acceptance. This section does not adopt existing Article 2 provisions relating to actions inconsistent with the party's ownership since, as in Article 2A, there is a split between performance and retention of ownership in many cases. That split indicates that, as in 2A, the ownership standard is not relevant to use of information assets and other performance relevant here. 3. Subsection (a)(3) and (4) focus on two circumstances significant in reference to information and that raises issues different from cases involving goods. In (a)(3), the key fact is that it would be inequitable or impossible to reject the data or information having received and commingled the material. The receiving party can exercise rights in the event of breach, but refusal is not a helpful paradigm. A rejecting licensee must return or keep the digital information available for return to the licensor. Commingling does not refer only to placing the information into a common mass from which they are indistinguishable; it also includes cases in which software is integrated into a complex system in a way that renders removal and return impossible or where they are integrated into a database or knowledge base that they cannot be separated from. 4. Subsection (a)(4) involves use or exploitation of the value of the material by the licensee. In information transactions, it is the case that in many instances merely being exposed to the factual or other material transfers the significant value. Often, use of the information does the same. Again, rejection is not a useful paradigm. The recipient can sue for damages for breach and, when breach is material, either collect back its paid up price or avoid paying a price that would otherwise be due. Illustration 1: Licensee receives a right to use a mailing list of names of customers of Macey's store. It notices that the list contains no names from a particular zip code, but goes ahead with an initial mailing. It then seeks to reject. However, acceptance has already occurred if substantial value was received. Licensee can collect damages for the error and, if the breach was material, avoid obligation for the price. But it cannot reject. Illustration 2: A contracts with B to obtain the formula to Coca Cola along with information about how to mix the formula. B delivers the formula, but the mixing information is inadequate. If the mixing information is not significant to the entire deal, A cannot reject because it received substantial performance. If the mixing information is significant, a right to reject may arise because of a material breach. However, subsection (a)(4) bars rejection if A received substantial value by obtaining knowledge of the formula and cannot return that knowledge. Even though it can return copies of the formula, the knowledge would remain. A can sue for damages, but cannot reject after the formula is made known to it. Illustration 3: Intel contracts with John for a right to use John's list of the ten largest users of Motorola chips in the Southwest. The price is $1 million. John supplies the list, but there are two names that, through negligence, are not correct. After reading the list, Intel desires to reject the performance and cancel the contract. Subsection (a)(4) would ask whether Intel received substantial valuable knowledge and, thus, cannot reject. If so, its remedies are for breach under applicable sections involving a recovery for the difference in promised and received value. If it can reject, it can recover the part of the price already paid, plus any relevant and provable loss under the methods described in this Article. 5. This section must be read in relationship to the reduced importance of acceptance. Refusal and revocation both require material breach in order to avoid the obligation to pay according to the contract. This is unlike Article 2 which follows a perfect tender rule for rejection, but conditions revocation on substantial impairment. Acceptance does not waive a right to recover for deficiencies in the performance. |