(a) Words or conduct relevant to the creation of an express warranty and words or conduct tending to disclaim or modify an express warranty shall be construed wherever reasonable as consistent with each other. Subject to Section 2B-301 with regard to parol or extrinsic evidence, disclaimer or modification is inoperative to the extent that such construction is unreasonable.

(b) Except as otherwise provided in subsection (c), to disclaim or modify an implied warranty or any part of it, other than the warranty in Section 2B-401, the following rules apply:

(1) Language of disclaimer or limitation modification must be in a record.

(2) To disclaim or modify an implied warranty under Section 2B-403 or 2B-404, language that mentions "quality" or "merchantability" is sufficient as to Section 2B-403, and language that mentions "accuracy", or words of similar import, is sufficient as to Section 2B-404.

(3) To disclaim or modify an implied warranty arising under Section 2B-405, it is sufficient to state: "There is no warranty that this information or my efforts will fulfill any of your particular purposes or needs", or words of similar import.

(4) In a mass-market license : (A) language in a record that disclaims or modifies an implied warranty must be conspicuous.; and (B) to disclaim all implied warranties, other than the warranty under Section 2B-401, language in a record is sufficient if it states: "Except for express warranties stated in this contract, if any, this [information] [computer program] is being provided with all faults, and the entire risk as to satisfactory quality, performance, accuracy, and effort is with the user"," or words of similar import.

(5) Notwithstanding any other provision of this subsection, language sufficient to disclaim or modify the implied warranty of merchantability under Article 2 or 2A is sufficient to disclaim or modify the warranties under Sections 2B-403 and 2B-404, and language sufficient to disclaim or modify a warranty of fitness for a particular purpose under Article 2 or 2A is sufficient to disclaim or modify the warranty under Section 2B-405.

(c) Notwithstanding subsection (b), the following rules apply:

(1) Unless the circumstances indicate otherwise, all implied warranties, other than the warranty in Section 2B-401, are disclaimed by:

(2) There is no implied warranty with respect to a defect that before entering the contract was known to, discovered by, or disclosed to the licensee, or that would have been discovered by the licensee if it made use of a reasonable opportunity provided to it prior before to entering into the contract to examine, inspect, or test the information or a sample thereof, unless the licensee was not aware of the defect after examination and the licensor knew that it existed at that time.

(3) An implied warranty may can also be excluded or modified by course of dealing or course of performance or usage of trade.

(d) If a contract requires ongoing performance or a series of performances by the licensor, language of disclaimer that complies with this section is effective with respect to all performances that occur after the contract is formed.

(e) Remedies for breach of warranty may be limited in accordance with Sections 2B-703 and 2B-705. the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy.

"Computer program": Section 2B-102. "Conspicuous": Section 2B-102. "Contract": Section 2B-102. "Information": Section 2B-102. "Licensee": Section 2B-102. "Licensor": Section 2B-102. "Mass-market license": Section 2B-102. "Record": Section 2B-102.

a. Accepted motion to delete requirement of conspicuousness for non-mass market disclaimers.

b. Rejected a motion to delete conspicuousness for mass market contracts.

c. Rejected a motion to delete former (b)(5) by a vote of 3 - 6.

d. Accepted a motion to delete former (b)(6) by a vote of 6 -4 with the ability to rewrite.

e. Deleted the reference to use of trade in former (b)(5). Vote: 8 - 2.

f. Adopted a motion to restrict "as is" language to exclude then-existing fitness warranty because at that time that warranty created a services obligation. Vote: 6- 3.

g. Adopted motion to use mass market, rather than the idea of consumer. Vote: 8-2 (Dec. 1996)

h. Rejected motion to adopt Article 2 language precluding disclaimer of consequential damages for personal injury. Vote: 2-8.

i. Accepted motion that a conspicuous term is not a refusal term under former 2B-308. Vote: 9-1

j. Voted 7-6 to use mass market, rather than consumer in this section. (Feb. 1997).

Should this Article return to existing law and require a disclaimer in a record to be conspicuous, but allow disclaimers that are not in a record in light of the allowance of oral contracts?

1. General Structure and Policy. This Section brings together various rules and guidance-giving provisions relating to the disclaimer of warranties. As under current Article 2, treatment of disclaimer of the warranties relating to infringement is not in this Section, but is contained in Section 2B-401.

The general approach to warranty obligations and disclaimers in this Article corresponds to the approach in existing Article 2 and Article 2A. Express warranties are difficult to disclaim since, by definition, they are part of the bargain. Beyond that, modern U.S. law recognizes the ability of a party to disclaim or delimit implied warranties. This reflects the fact that the warranties are default, rather than mandatory or immutable rules. Disclaimer and limitation of warranties is integral to the contract choice paradigm under which commerce occurs and to the ability of a party to both choose the terms under which it markets information products and the risk it elects to undertake.

The provisions of this section do not alter consumer protection laws and regulations that may be applicable. See Section 2B-104.

2. Express Warranties. Subsection (a) restates current Article 2 law, bringing that law to bear on other transactions covered by this Article, but not within the U.C.C. under existing Article 2. It uses modern language of "disclaimer" and "modification", rather than current Article 2 language, without substantive change.

3. Disclaimer of Implied Warranties: General Rules. Subsection (b) brings together various provisions dealing with disclaimers of implied warranties other than the warranty pertaining to infringement and quiet enjoyment. It differentiates between mass-market and non-mass-market disclaimers and modifications of warranty. Specific treatment of mass-market licenses is in subsection (b)(4).

a. Record Required. Article 2B deviates from existing law and, except for the situations noted in subsection (c), requires that a disclaimer of an implied warranty be in a record. Article 2 makes use of a record optional. The requirement increases the likelihood that the disclaimer will be brought to the other party's attention and provides a form of statute of frauds requirement against fraudulent claims that a disclaimer occurred.

b. Conspicuousness. Except for mass-market licenses, Article 2B does not require that a disclaimer be conspicuous. Outside the mass market, this requirement is often superfluous and provides a trap for persons drafting contracts who are found later to have failed to meet applicable standards that the language be conspicuous. Article 2 in current law requires a conspicuous disclaimer only if the disclaimer is in writing.

c. Merchantability and Accuracy Warranties. Subsection (b)(2) follows current law and provides language that suffices to disclaim the merchantability, quality and accuracy warranties. Importantly, as in existing Article 2, the specified language is not mandatory. This language works, but other language also works if it reasonably achieves the purpose of indicating that the pertinent warranty is are not given in the particular case.

d. Fitness Warranty. Subsection (b)(3) follows current law and provides language adequate to disclaim the warranty under Section 2B-405. The language used in this Article is more explicit than that authorized under Article 2. As in existing Article 2, the specified language is not mandatory. This language works, but other language may also work if it reasonably achieves the purpose; that purpose is to indicate that the pertinent warranty is not given in the particular case.

e. Article 2 and 2A Disclaimers. Subsection (b)(5) provides for cross-article validity of disclaimer language. The intent is to avoid parties having to make a priori determinations about the extent of Article 2B or Article 2 coverage. In effect, language adequate to disclaim a warranty under the one article is adequate to disclaim the equivalent warranty under the other.

4. Mass-Market Disclaimers. Subsection (b)(4) provides special rules with reference to mass-market disclaimers. Subject to the provisions of subsection (c), a disclaimer in a mass market environment must be conspicuous and in a record. If the intent is to disclaim all warranties in a single sentence, the subsection sets out a common language disclaimer based on proposals by the software industry as a means of giving more disclosure to the consumer of what is disclaimed. Importantly, as in existing Article 2, the specified language is not mandatory. This language works, but other language also works if it reasonably achieves the purpose of indicating that the warranties are not given in the particular case.

5. "As is" Disclaimers. Subsection (c)(1) deals with the effect of language or circumstances indicating that the information product is provided on an "as is" basis. It follows existing Article 2 language, providing parties with a means of conducting business without giving assurances of quality. The "as is" language need not be in a record. It is not effective with respect to the infringement warranty unless the circumstances or language satisfy the standard stated in Section 2B-401. As with all of the provisions of Subsection (c), this section supersedes the requires of subsection (b) except as noted.

The bracketed language raises the important question of whether "as is" transfers should be permitted in mass-market transactions. Current law in article 2 does not exempt consumer or mass-market transactions from the ability to use this language to provide information without qualitative assurances. No clear rationale appears to mandate a deviation from existing Article 2 on this point. However, it is not clear whether the Committee has yet addressed the question and the brackets are presented to raise the issue.

6. Excluding Warranties by Inspection or General Circumstances. Subsection (c)(2)(3) are taken from existing Article 2 with modifications to reflect the circumstances present in information transactions and especially transactions involving computer programs.

a. Inspection and Disclosure. As in Article 2, an information provider is not responsible for defects that were either 1) known by or disclosed to the other party, or 2) could have been discovered on reasonable inspection if the opportunity to inspect was available. On the inspection issue, the language of this exclusionary principle was modified from existing Article 2 to reflect realities of inspection in complex computer program systems and to make clear that the inspection opportunity must be before the contract is formed since it relates to the existence or non-existence of warranties in that contract.

b. Course of Dealing, etc. Subsection (c)(3) is taken from existing Article 2. Re-inclusion of exclusion by "trade use" is suggested as a means of harmonizing to existing law and for substantive reasons. Under Section 2B-402, an implied warranty can be created by use of trade and exclusion by the same means is appropriate.

7. Subsection (e) conforms to current Article 2.