(a) Subject to subsection (b), in the case of a conflict between this article and a statute or regulation of this State as judicially construed and in effect on the effective date of this article as judicially construed, the conflicting statute or regulation controls if it:

(1) establishes a right of access to or use of information or informational property rights by compulsory licensing or public access or a similar law;

(2) regulates the purchase or license of rights in motion pictures by exhibitors; or

(3) establishes a consumer protection.

(b) If a law of this State in effect existing on the effective date of this article applies to a transaction governed by this article, the following rules apply:

(1) A requirement that a contractual obligation, waiver, notice, or disclaimer be in writing is satisfied by a record.

(2) A requirement that a record or a contractual term be signed is satisfied by an authentication.

(3) A requirement that a contractual term be conspicuous or the like is satisfied by a term that is conspicuous in accordance with this article.

(4) A requirement of consent or agreement to a contractual term is satisfied by an action that manifests assent to a term in accordance with this article.

(c) A statute authorizing electronic or digital signatures existing in effect on the effective date of this article is not affected by this article, but except that in the case of a conflict this article controls.

(d) With respect to this article, fFailure to comply with a statute or regulation law referred to in subsection (a) has only the effect specified therein.

[Legislative Note: The state should review the statutes affected by subsection (b) to determine if that effect should not apply to some of those statutes.]

Sources: Section 9-104(1)(a); 2A-104(1)

"Agreement". "Conspicuous". Section 2B-102. "Consumer". Section 2B-102. "Court". Section 2B-102. "Electronic". Section 2B-102. "Information". Section 2B-102. "License". Section 2B-102. "Notice". Section 1-201. "Purchase". Section 1-201. "Record". Section 2B-102. "Rights". Section 1-201. "Signed". Section 1-201. "Term". Section 1-201. "Writing". Section 1-201.

a. Voted 11-1 to approve the section. (September, 1996)

b. Reviewed without substantive change. (February, 1997); (Nov. 1997); (Feb. 1998).

1. General Principles. Many contracts that are governed as to contract law principles by Article 2B are also governed by other state statutes, regulations and common law principles. In most instances, the other legal principles are parallel or deal with different subject matter than Article 2B or the U.C.C. generally. This is especially true with respect to regulatory rules that mandate some conduct in a specific industry or market. These mandatory rules coexist with contract law since, as in Article 2B, the contract law focuses on general formation principles and background rules that are subject to contrary agreement or mandate. Of course, when the common law does conflict with Article 2B, the later-enacted, uniform statutory treatment of the UCC (Article 2B) controls.

Subsection (a) describes three types of statutes or regulations to which this Article defers in the case of conflict if they are in existence at the time of adoption of Article 2B. The reference is to the laws of "this" state. Since these are substantive rules, in multistate transactions, that reference relates to the state whose substantive law applies under choice of law principles. The conflict is measured as of the effective date of this article. Subsequent regulations and statutes on any topic will contain their own provisions as to their impact on pre-existing law which, in the case of subsequent enactment would of course include Article 2B.

There are many other laws that are not altered or over-ridden by Article 2B, of course, because Article 2B does not deal with the same topic. For these, the differences in subject matter and focus are sufficiently clear that it was not necessary to list the particular law. Thus, Article 2B does not deal with property rights or privacy law. It deals with contract law. State law concerning trade secrecy are outside the scope and unaffected by this Article except as they interact with contracts. While these rights may be licensed by a contract within this article, Article 2B applies to the license but not the underlying right. For example, a state law might provide that an individual controls use of data concerning that person, but can contract away that right. The creation of the right and its scope, including the extent it can be waived are not considered in Article 2B.

2. Mandated Disclosure Laws. Conflicting statutes or regulations that compel disclosure or other access to information prevail over any Article 2B rule in the event of conflict. In some situations, the relationships that develop because of the mandated disclosure may have contractual overtones, but equally often, they arise by operation of law. A relationship that arises by operation of law does not fall within this Article. Furthermore, the relevant terms and conditions of the statutorily mandated relationship override this Article and its default rules even if the relationship also involves a license.

3. Blind Bidding Laws. Article 2B also does not affect various state laws that regulate blind bidding and other practices often specifically relevant to the motion picture industry. These regulations deal with obligations of pre-contract disclosure and purchasing practices. In large part, they would not, in any event, be affected by adoption of Article 2B since they deal with regulation of relationships for which Article 2B merely provides general contract formation rules and default rules that pertain in the absence of contrary agreement or mandate. Nevertheless, in some respects the statutes pertain to contract formation concepts that might be seen as in conflict with the general commercial contract formation rules in this Article. To avoid uncertainty, the resolution of any conflict is made explicit here. As with consumer laws, these statutes were developed through extensive policy debate. Article 2B does not disturb the judgments reached in those debates.

4. Relationship to Consumer Law. Article 2B does not generally alter state consumer protection statutes as enacted and judicially interpreted as of the effective date of enactment of Article 2B. This deference to consumer protection law acknowledges the role of state consumer protection statutes as a complement to the UCC. Consistent with the stated purpose of the UCC, Article 2B deals with general contract law and commercial contract law principles. It does not promulgate a body of consumer protection laws, although it does contain consumer protections. Historically, consumer protection issues have been resolved on a state-by-state basis with often radically different outcomes. While the results differ, consumer protection statutes reflect extensive policy review about the appropriate relationship between protection and contract freedom in each state. Article 2B, as a general, commercial contract statute, does not address or override these judgments.

With the exception of the electronic commerce rules in subsection (b), a state's consumer protection statutes or regulations, as judicially construed trump the general contract law provisions of this Article. Thus, for example, a consumer protection statute that precludes disclaimer of warranty in a particular type of transaction with a consumer controls over the provisions of this Article dealing with disclaimer of warranty. A state law that mandates disclosure of local service outlets or the location of the licensor's main business office in a consumer transaction is not affected by any provision of Article 2B.

In addition, of course, Article 2B contains a number of consumer protection rules. These arise as a result of a specific reference to a consumer transaction in a provision of this Article, or by reference to particular transactions involving mass market licenses, a category that includes all consumer transactions. The provisions that fall into these categories augment existing consumer protection statutes in a state. However, to the extent they conflict with existing consumer statutes in that state, the existing protections control. A conflict, for this purpose, would be an Article 2B rule that provides lesser protection for the consumer than does the consumer protection regulation. The provisions of this Article that deal with consumer protection in specific terms referenced to the mass market or to consumer transactions include: 2B-107 (choice of law), 2B-118 (electronic error); 2B-208 (limitation on mass market license; right to refund); 2B-303 (limitation on no-oral modification clause); 2B-304 (limitation on modification of continuing contracts); 2B-403 (implied warranty of merchantability); 2B-406 (disclaimer must be conspicuous); 2B-502 (license presumed transferable); 2B-609 (perfect tender required); 2B-619 (limitation on hell and high water clauses).

4. Laws on Computer Viruses. Article 2B does not deal with computer viruses and does not alter existing criminal or tort law on that subject. In general, a "virus" consists of computer code entered into a software or other system with the intended effect of disrupting the system or altering or destroying information within that system. Law in most states and federal law makes the knowing or intentional introduction of a computer virus a criminal act. See, e.g., Raymond Nimmer, Information Law ¶ 9.04 (1997). The statutes reflect an increasing public perception that a computer virus "problem" exists. The fact that most state law and enforcement concerning viruses falls under criminal law correctly suggests that most virus risks result from acts of third parties not in a contractual relationship with the victim.

Acts that cause loss through the creation or distribution of a computer virus may also give rise to liability in tort. The cause of action may involve damage to property or trespass, or it may be grounded in general concepts of negligence and reasonable care. While few civil actions have been brought, the liability of a wrongdoer for actions that harm a third party involve issues other than under contract law.

As to contractual issues, virus problems typically arise between two, ordinarily innocent, contracting parties. In licensing law under Article 2B, they are handled as is any other type of contract risk. A virus present in information provided pursuant to a contract may cause the information to fail to perform within contract requirements. The remedy, in contract, is determined by the general rules of this Article. The remedy under tort law or the sanction under criminal law are determined by the rules of those particular bodies of law.

5. Electronic Commerce Issues. Subsection (b) states a general principle related to Article 2B rules on electronic commerce. The principle is that Article 2B overrides contrary state law requiring a "writing", a "signature" or a "conspicuous" term to the extent that it provides alternative electronic commerce compatible rules on issues such as authentication and the like. This premise, of course, operates only within the scope of this Article. The rule is necessary to ensure optimal impact for the modernization themes developed with reference to electronic commerce.

There are hundreds of potentially relevant statutes that may affect electronic commerce. For transactions governed by Article 2B, the rules of this Article ordinarily supplant the other law as to contractual issues in full and the express preemption stated in this section is not necessary. That is not true for consumer transactions. In the consumer area, the four stated themes implement a limited effort that balances the modernization theme and the desire not to alter existing patterns of protection. The Article 2B rule is very limited. It implements a balance between the modernization themes in Article 2B relating to electronic commerce and existing law on consumer contracts. The limited approach, adopted here, contrasts to non-uniform digital signature statutes enacted in several states which replace or amend all signature and writing requirements, including consumer law mandates.

The historical policy debates that led in the past to requiring a "writing" were conducted without considering digital alternatives. Article 2B expands the idea of a writing and a signature to include, respectively, a record and an authentication. Conspicuous is defined to deal with electronic contexts and expanded by an enhanced concept of manifestation of assent. In these respects, electronic concepts that were not at issue when existing consumer law developed, require adjustments appropriate to promote uniformity and certainty in commerce that is national and international in nature, while preserving the intent of the regulations. There is no change in the substantive content of statutes or regulations, such as whether a disclaimer can ever be made, what language must be used, and like issues.

The balance adopted here preserves the important policies (e.g., the principle of general non-reversal of consumer statutes and regulations), but extends the innovations in electronic contracting.

An additional issue entails coordination between Article 2B and any existing electronic or digital signature statute. Digital signature statutes that predate Article 2B are not repealed or affected by Article 2B, except in the event of a direct conflict. In current enacted statutes on this subject, no conflict exists. The statutes create a procedure consistent with the more general Article 2B idea of attribution procedure and deal with additional subject matter to which Article 2B is not addressed.