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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-716. (1) without a breach of the peace; (2) without a foreseeable risk of personal injury or significant damage to information or property other than the licensed information; and (3) when applicable, in compliance with subsection (b). (a) A licensor may not use electronic means to exercise its rights under Section 2B-715 unless: (1) the licensor obtains physical possession of a copy without a breach of the peace and the electronic means are used solely with respect to that copy; (2) the licensed information is information content licensed for display or performance for entertainment or educational purposes; (3) the licensed information is not material to the licensee's business or is not licensed for use in that business; or (4) the following conditions are met: (A) the licensee manifests assent to a term in the license that authorizes use of electronic means; and (B) the licensor gives notice in a record of the nature of the breach and of its intent to exercise the remedy: (i) to a person designated by the agreement of the parties for this purpose or, in the absence of a designation, to a senior information officer, managing partner, or managing agent of the licensee; and (ii) within the time and manner specified in the agreement or, in the absence of agreement, not less than 10 business days before utilizing the electronic means. (b) The parties by agreement may specify the timing, method, and manner of giving notice under subsection (b) unless the terms are manifestly unreasonable. (c) A party has a right to an expedited hearing to contest or affirm the licensor's right to proceed under subsection (a). (d) An act that violates this section is a breach of contract unless it is authorized by other law. (e) The licensee cannot waive the protections of this section Uniform Law Source: Section 9-503. Revised. Committee Action: a. Considered and substantially revised in January 1996.b. Motion to delete the section and adopt alternative B was withdrawn. Sept. 1997 d. Motion to endorse alternative A approach, passed 10-1 (Nov. 1997) e. Motion to make personal injury risk applicable to all self-help, withdrawn. f. Rejected a motion to delete the right to an expedited hearing. Vote: 4-7 (Nov. 1997) g. Adopted a motion to indicate that the time of notice is as specified in the agreement or, in the absence of specific terms, a time no less than ten days prior to exercise of the right. Vote: 10-0 h. Adopted a motion that the person to be given notice is as specified in the agreement and, in the absence of contract terms, one of the listed persons. Vote: 12 -1 (Nov. 1997) i. Rejected a motion that consequential damages under this section cannot be waived by contract. Vote 5-7 (Nov. 1997) j. Rejected a motion giving the state jurisdiction over a foreign party who exercises this right against a resident of the state. Vote: 5 -7 (Nov. 1997) Reporter's Notes: 1. Scope of the Section. This section deals with "electronic self-help." It does not deal with discontinuation of an access contract. See Section 2B-714. Electronic self-help exists as a potential remedy because digital technology enables a licensor to use remote means to disable a copy of digital information in the event of breach. provisions are controversial. This Section recognizes the availability of this remedy, but places severe restrictions on its exercise. These licensee protections are far in excess of those provided for under Article 2A (leases) or Article 9 (security interests), both of which allow the injured party to repossess by rendering the goods "unusable" without taking possession if the goods are used in a trade or business. That can be done physically or electronically in the digital world. It is already being done electronically with automobile rentals and other limited term or limited use contracts. The limited case law on electronic self-help enforces the remedy if advance notice or prior agreement allows it. See American Computer Trust Leasing v. Jack Farrell Implement Co., 763 F. Supp. 1473 (D Minn. 1991) (court held that remote deactivation was permitted for a breach of payment obligations on a software license). Several cases disallow use of this procedure if no prior authorization or notice was given. See Franks & Son, Inc. v. Information Solutions</parties> (^^^45890831^^0^0), <citation> (^^^45891888^^0^0)Computer Industry Litigation Rep. 8927-25 (N.D. Okla. 1988) (Jan. 23, 1989); Art Stone Theatrical Corp. v. Technical Programming & Sys. Support, Inc.</parties> (^^^46235280^^0^0), <citation> (^^^46236337^^0^0)157 App. Div. 2d 689</citation> (^^^46238639^^0^0), <citation> (^^^46239696^^0^0)549 N.Y.S.2d 789 (1990)</citation> (^^^46242823^^0^0)</case> (^^^46243404^^0^0). 2. Basic approach. The basic principle is that self-help remedies are appropriate, but that there are important concerns about restraining the leverage this form of repossession creates in settings in which the information is critical to the business licensee. The prefatory language in (b) limits the additional protections to these circumstances. Of course, the use of electronic self-help is also restricted by the provisions of Section 2B-715(b) on breach of the peace and risk of personal or property damage. a. Physical Possession. Subsection (a)(1) makes clear that ordinary methods currently used to enforce rights through physical repossession are not invalidated simply because electronics may eventually be involved. Thus, for example, an access card that is repossessed by an ATM or similar device refusing to return the card is subject to the general rule of breach of the peace, rather than to the more elaborate protections established for electronic self-help. b. Agreement and Notice. Subsection (a)(4) outlines a series of restrictions on electronic means in all other cases of operation software where the licensee's risk is high. Electronic self-help remedy is restricted by contractual consent and prior notice. The required notice is important because the licensee is given a right to an expedited hearing to contest the electronic disabling of the licensed information. c. Expedited Hearing. Subsection (c) gives the licensee a right to an expedited hearing to context the licensor's right to electronic disabling of the licensed information. Thus, given the required notice, most issues about this remedy will devolve into questions about judicial remedies, rather than self-help, unless the licensee chooses to not context the repossession. d. Damages. Subsection (d) makes clear that actions that fail to conform to this Section constitute a breach, entitling the licensee to damages, including, when appropriate, damages for personal injury or property damage. This follows Article 2A. Improper use may also be conversion, trespass or another tort under applicable law. e. Non-Waiver. Subsection (f) provides that rights under this Section cannot be waived prior to breach. PART 8 TRANSITION PROVISIONS |