(a) Subject to subsection (c), express warranties by the the licensor are created as follows:

(1) Any affirmation of fact or promise made by the licensor to its licensee in any manner, including in a medium for communication to the public such as advertising, which relates to the information and becomes part of the basis of the bargain creates an express warranty that the information required under the agreement will shall conform to the affirmation or promise.

(2) Any description of the information which is made part of the basis of the bargain creates an express warranty that the information shall conform to the description.

(3) Any sample, model, or demonstration of a final product which is made part of the basis of the bargain creates an express warranty that the performance of the information will reasonably conform to the performance illustrated by the model, sample, or demonstration, taking into account such differences between the sample, model, or demonstration and the information as it would be used as would appear be apparent to a reasonable person in the position of the licensee.

(b) It is not necessary to the creation of an express warranty that the licensor use formal words such as "warrant" or "guarantee", or state a specific intention to make a warranty. However, an affirmation or prediction merely of the value of the information, a display or description of a portion of the information to illustrate the aesthetics or market appeal of informational content, or a statement purporting to be merely the licensor's opinion or commendation of the information does not create a warranty.

(c) This section does not create any express warranty for published informational content. However, it but does not preclude the creation of an express warranty under other law or the creation of an express contractual obligation for published informational content. If an express warranty or contractual obligation is established for published informational content and is breached, the remedies of the aggrieved party arise under this article.

a. Deleted former subsection (b) that warranties are limited to the time of transfer based on the argument that this merely restates current law and that the issue can be made clear in the comments.

b. Rejected motion to limit section to the immediate parties. Vote: 4-5

c. Adopted motion to add "except for published informational content" to make it clear draft is neutral on the law development here. Vote: 7-3.

d. Adopted motion to accept statement in (c) that leaves the development of obligations for informational content to common law. Vote: 6-2 (June, 1997)

1. Basis of the Bargain: General Approach. This section adopts existing Article 2, except with respect to published informational content, where it preserves current common law rules relating to express obligations without changing standards applicable under this other law.

Subsection (a) retains the "basis of the bargain" standard from current Article 2 and Article 2A. This allows courts and parties to draw on an extensive body of case law for distinguishing express warranties from puffing and other, non-enforceable statements. While the cases involve many difficult factual determinations, they provide better guidance than would an entirely new standard. See, e.g., Fargo Machine & Tool Co. v. Kearney & Trecker Corp., 428 F. Supp. 364 (E.D. Mich. 1977); Computerized Radiological Service v. Syntex, 595 F.Supp. 1495 (E.D.N.Y. 1984), rev'd on other grounds, 786 F.2d 72 (2d Cir. 1986); Management Sys. Assocs. v. McDonnell Douglas Corp., 762 F.2d 1161 (4th Cir. 1985); Consolidated Data Terminal v. Applied Digital Systems Inc., 708 F.2d 385 (9th Cir. 1983); Cricket Alley Corp. v. Data Terminal Systems, Inc., 240 Kan. 661, 732 P.2d 719 (Kan. 1987).

While there has been some dispute about the meaning of the traditional "basis of the bargain" standard, the basic concept is that express affirmations, promises and the like are enforceable as express warranties if they fit within the matrix of elements that constitute the bargain of the parties, but that they are not enforceable as express warranties if they are not part of the basis of the contractual deal. This standard does not require proof of reliance in the sense of a particular representation being relied on to make the deal, but rather enables a more general showing that the statements are part of the deal and basic to it.

2. Basis of the Bargain: Advertising. Subsection (a)(1) conforms to existing Article 2, except that it expressly provides that advertising or other forms of general communication may serve as a basis for the existence of an express warranty. This clarifies the rule; it expands the scope of express warranty law in some states. Statements made in advertising, of course, become express warranties under the standards applicable to any form of statement regarding the information. Mere puffing does not create a warranty and expressions of fact or promises are warranties only if they are part of the basis of the bargain. Of course, this requires that a bargain occur between the licensor making the representations and the licensee. In the absence of such a relationship, liability for advertising statements, if any arise, would not be under contract law, but under tort or advertising law rules.

3. Basis of the Bargain: Samples and Models. Subsection (a)(3) deals with samples and similar demonstrations. It expands current Article 2 by expressly referring to express warranties created by demonstrations of an information product.

The subsection also deals with beta models, which are employed in testing not yet completed products. A beta model may include elements that are not carried into the final product and may include defects that are not cured in the final product. In either event, the parties both expect that the product being demonstrated or used is not representative of what will eventually be the product and the exclusion here is designed to protect against harm to either party as a result (e.g., licensee believes a defect will be cured, but it is not cured; licensor elects to delete an element in the test model when it produces the eventual product).

More generally, the subsection indicates that the representations created by demonstrations and models must be gauged by what inferences would be communicated to a reasonable person in light of the nature of the sample. In the world of goods, showing a sample of a keg of raw beans by lifting out a cup-full and allowing the buyer to inspect it communications one inference as to a whole, while a demonstration of a complex database program running ten files creates an entirely different inference if the intended use of the system is to process ten million files. The standard stated here captures the approach of most courts to such issues.

4. Published Informational Content. Subsection (c) preserves current law for published informational content. While there are many reported cases dealing with express warranties in goods and using the standards adopted here, no case law exists for published informational content using the Article 2 standards. This subject matter entails significant First Amendment interests and general public policies that favor encouraging public dissemination of information. Courts that deal with liability risks pertaining to this subject matter must balance contract themes with more general social policies.

The intent is to leave undisturbed any existing law dealing with under what obligations can be created and how they are established with reference to published information. Courts, if inclined to find contract liability for published information, may do so under any general contract law theory. Many will conclude that the broad risk in the published content situation and the potentially stifling effect that imposing contract liability in that realm might have on the dissemination of speech should lean toward limiting or excluding liability in that context. However, that dispute evolves in particular cases, merely adopting Article 2 concepts from sales of goods to this much different context would risk a large and largely unknown change or over-reaching of liability in a sensitive area.

The term, "published information content" focuses on information content not customized to particular end users. The exclusion follows current law, requiring more than just general, undifferentiated statement for expanding liability in the public market of ideas and content. The basic assumption in current law is that liability for information content does not exist unless there is a special or direct relationship creating it. There are no cases using warranty theory for generally distributed information based on contract concepts and only a small number of cases under other contract theory.