Uniform Computer Info Trans Act

Adopts the Uniform Computer Information Transactions Act of the
National Conference of Commissioners on Uniform Laws to provide
requirements for computer information transactions involving an
agreement to create, modify, transfer, or license computer
information or informational rights in computer information.

HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 2 a new chapter to be appropriately designated and to read as
 3 follows:
 4                             "CHAPTER
 6                    PART I.  GENERAL PROVISIONS
 8         -101  Short title.  This chapter may be cited as the
 9 Uniform                                        10         -102  Definitions.(a)  In this chapter:
11      "Access contract" means a contract to obtain electronically
12 access to, or information from, an information processing system
13 of another person, or the equivalent of such access.
14      "Access material" means any information or material, such as
15 a document, address, or access code, necessary to obtain
16 authorized access to information or control or possession of a
17 copy.
18      "Aggrieved party" means a party entitled to a remedy for
19 breach of contract.

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 1      "Agreement" means the bargain of the parties in fact as
 2 found in their language or by implication from other
 3 circumstances including course of performance, course of dealing,
 4 and usage of trade as provided in this chapter.  Whether an
 5 agreement has legal consequences is determined by this chapter.
 6      "Attribution procedure" means a procedure established by
 7 law, administrative rule, or agreement, or a procedure otherwise
 8 adopted by the parties, to verify that an electronic event is
 9 that of a specific person or to detect changes or errors in the
10 information.  The term includes a procedure that requires the use
11 of algorithms or other codes, identifying words or numbers,
12 encryption, callback or other acknowledgment, or any other
13 procedures that are reasonable under the circumstances.
14      "Authenticate" means to sign, or otherwise to execute or
15 adopt an electronic symbol, sound, or process attached to,
16 included in, or logically associated or linked with, a record or
17 term, with the intent to sign the record or a record to which it
18 refers.
19      "Automated transaction" means a contract formed or performed
20 in whole or in part by electronic means or by electronic messages
21 in which the electronic actions or messages of one or both
22 parties which establish the contract are not reviewed in the
23 ordinary course by an individual before the action or response.

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 1      "Burden of establishing", with respect to a fact, means the
 2 burden of persuading a trier of fact that the existence of the
 3 fact is more probable than its nonexistence.
 4      "Cancellation" means an act by a party that puts an end to
 5 the contract for breach by another.
 6      "Computer" means an electronic device that accepts
 7 information in digital or similar form and manipulates it for a
 8 specific result based on a sequence of instructions.
 9      "Computer information" means information in electronic form
10 that is obtained from or through the use of a computer, or that
11 is in digital or similar form capable of being processed by a
12 computer.  The term includes a copy of information in that form
13 and any documentation or packaging associated with the copy.
14      "Computer information transaction" means an agreement and
15 the performance of that agreement to create, modify, transfer, or
16 license computer information or informational rights in computer
17 information.  The term includes a support agreement to the extent
18 covered in section    -612.  A transaction is not included merely
19 because the parties' agreement includes that their communications
20 about the transaction will be in the form of computer
21 information.
22      "Computer program" means a set of statements or instructions
23 to be used directly or indirectly in a computer to bring about a

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 1 certain result.  The term does not include separately
 2 identifiable informational content.
 3      "Consequential damages" resulting from breach of contract
 4 include (1) any loss resulting from general or particular
 5 requirements and needs of which the other party at the time of
 6 contracting had reason to know and which could not reasonably be
 7 prevented, and (2) injury to person or damage to other property
 8 proximately resulting from any breach of warranty.  The term does
 9 not include direct or incidental damages.
10      "Conspicuous", with reference to a term, means so written,
11 displayed, or otherwise presented that a reasonable person
12 against which it is to operate ought to have noticed it.  A term
13 in an electronic record intended to evoke a response by an
14 electronic agent is conspicuous if it is presented in a form that
15 would enable a reasonably configured electronic agent to take it
16 into account or react without review of the record by an
17 individual.  Conspicuous terms include the following:
18      (1)  With respect to a person:
19           (A)  A heading in capitals in a size equal to or
20                greater than, or in contrasting type, font, or
21                color to, the surrounding text;
22           (B)  Language in the body of a record or display in
23                larger or other contrasting type, font, or color

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 1                or set off from the surrounding text by symbols or
 2                other marks that call attention to the language;
 3                and
 4           (C)  A term prominently referenced in an electronic
 5                record or display which is readily accessible and
 6                reviewable from the record or display; and
 7      (2)  With respect to a person or an electronic agent, a term
 8           or reference to a term that is so placed in a record or
 9           display that the person or electronic agent can not
10           proceed without taking some action with respect to the
11           term or reference.
12      "Consumer" means an individual who is a licensee of
13 information or informational rights that the individual at the
14 time of contracting intended to be used primarily for personal,
15 family, or household purposes.  The term does not include an
16 individual who is a licensee primarily for professional, or
17 commercial purposes, including agriculture, business management,
18 and investment management other than management of the
19 individual's personal or family investments.
20      "Consumer contract" means a contract between a merchant
21 licensor and a consumer.
22      "Contract" means the total legal obligation which results
23 from the parties' agreement as affected by this chapter and any

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 1 other applicable rules of law.
 2      "Contract fee" means the price, fee, rent, or royalty
 3 payable in a contract under this chapter.
 4      "Contractual use restriction" means an enforceable
 5 restriction created by contract which concerns the use or
 6 disclosure of, or access to licensed information or informational
 7 rights, including a limitation on scope or manner of use.
 8      "Copy" means the medium on which information is fixed on a
 9 temporary or permanent basis and from which it can be perceived,
10 reproduced, used, or communicated, either directly or with the
11 aid of a machine or device.
12      "Course of dealing" means a sequence of previous conduct
13 between the parties to a particular transaction which establishes
14 a common basis of understanding or interpreting their expressions
15 and other conduct.
16      "Course of performance" means a sequence of conduct in a
17 contract that involves repeated occasions for performance if a
18 party, with knowledge of the nature of the performance and
19 opportunity to object to it, accepts or acquiesces in the
20 repeated performance without objection.
21      "Court" includes an arbitration or other dispute-resolution
22 forum if the parties have agreed to use of that forum or its use
23 is required by law.

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 1      "Delivery," with respect to a copy, means the voluntary
 2 physical or electronic transfer of possession or control.
 3      "Direct damages" means compensation for losses measured by
 4 section    -808(b)(1) or    -809(a)(1).  The term does not
 5 include consequential or incidental damages.
 6      "Electronic" means relating to technology having electrical,
 7 digital, magnetic, wireless, optical, or electromagnetic, or
 8 similar capabilities.
 9      "Electronic agent" means a computer program, or electronic
10 or other automated means used independently to initiate an action
11 or respond to electronic messages or performances without review,
12 or action by an individual at the time of the action, response,
13 or performance.
14      "Electronic event" means an electronic authentication,
15 display, message, record, or performance.
16      "Electronic message" means a record or display stored,
17 generated, or transmitted by electronic means for the purposes of
18 communication to another person or electronic agent.
19      "Financial accommodation contract" means an agreement under
20 which a person extends a financial accommodation to a licensee
21 which agreement does not create a security interest in a
22 transaction that is subject to article 9 of the Uniform
23 Commercial Code.  The agreement may be in any form, including a

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 1 license, lease, or software lease.
 2      "Financial services transaction" means a contract or a
 3 transaction that provides access to, use, transfer, clearance,
 4 settlement, or processing of:
 5      (1)  Deposits, loans, funds, or monetary value represented
 6           in electronic form and stored or capable of storage
 7           electronically and retrievable and transferable
 8           electronically, or other right to payment to or from a
 9           person;
10      (2)  An instrument or other item;
11      (3)  A payment order, credit card transaction, debit card
12           transaction, or a funds transfer, automated clearing
13           house transfer, or similar wholesale or retail transfer
14           of funds;
15      (4)  A letter of credit, document of title, financial asset,
16           investment property, or similar asset held in a
17           fiduciary or agency capacity; or
18      (5)  Related identifying, verifying, access-enabling,
19           authorizing, or monitoring information.
20      "Financier" means a person that provides a financial
21 accommodation to a licensee under a financial accommodation
22 contract and either (1) becomes a licensee for the purpose of
23 transferring or sublicensing the license to the party to which

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 1 the financial accommodation is provided, or (2) obtains a
 2 contractual right under the financial accommodation contract to
 3 preclude the licensee's use of the information or informational
 4 rights under a license in the event of breach of the financial
 5 accommodation contract.  The term does not include a person that
 6 selects, creates, or supplies the information that is the subject
 7 of the license, owns the informational rights in the information,
 8 or provides support, modifications, or maintenance for the
 9 information.
10      "Good faith" means honesty in fact and the observance of
11 reasonable commercial standards of fair dealing.
12      "Incidental damages" resulting from breach of contract:
13      (1)  Means compensation for any commercially reasonable
14           charges, expenses, or commissions reasonably incurred
15           by an aggrieved party with respect to:
16           (A)  Inspection, receipt, transmission, transportation,
17                care, or custody of identified copies or
18                information that are the subject of the breach;
19           (B)  Stopping delivery, shipment, or transmission;
20           (C)  Effecting cover, return, or retransfer of copies
21                or information after the breach of contract;
22           (D)  Reasonable efforts after the breach otherwise to
23                minimize or avoid loss resulting from the breach;

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 1                and
 2           (E)  Matters otherwise incident to the breach; and
 3      (2) Does not include consequential or direct damages.
 4      "Individual" means a human being.
 5      "Information" means data, text, images, sounds, mask works,
 6 or computer program, including collections or compilations
 7 thereof.
 8      "Information processing system" means an electronic system
 9 for creating, generating, sending, receiving, storing,
10 displaying, or processing information.
11      "Informational content" means information that is intended
12 to be communicated to or perceived by an individual in the
13 ordinary use of the information, or the equivalent of that
14 information.  The term does not include computer instructions
15 that control the interaction of a computer program with other
16 computer programs or with a machine or device.
17      "Informational rights" include all rights in information
18 created under laws governing patents, copyrights, mask works,
19 trade secrets, trademarks, publicity rights, or any other law
20 that gives a person, independently of contract, a right to
21 control or preclude another person's use of or access to the
22 information on the basis of the rights holder's interest in the
23 information.

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 1      "Knowledge", with respect to a fact, means that a person has
 2 actual knowledge of the fact.
 3      "License" means a contract that authorizes access to, use
 4 of, distribution, display, performance, modification, or
 5 reproduction of information, or use of informational rights, and
 6 expressly limits the contractual rights, permissions, or uses
 7 granted, expressly prohibits some uses, or expressly grants less
 8 than all rights in the information.  A contract may be a license
 9 whether or not the transferee has title to a licensed copy.  The
10 term includes an access contract and a consignment of a copy.
11 The term does not include a reservation or creation of a security
12 interest.
13      "Licensee" means a transferee in a license or other
14 agreement under this chapter.  A licensor is not a licensee with
15 respect to rights reserved to it under the agreement.
16      "Licensor" means a transferor in a license or other
17 agreement under this chapter.  Between a provider of access in an
18 access contract and its customer, the provider is the licensor.
19 Between the provider of access and a provider of the
20 informational content to be accessed, the provider of content is
21 the licensor.  In an exchange of information or informational
22 rights, each party is a licensor with respect to the information,
23 informational rights, or access it provides.

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 1      "Mass-market license" means a standard form that is prepared
 2 for and used in a mass-market transaction.
 3      "Mass-market transaction" means a transaction under this
 4 chapter that is:
 5      (1)  A consumer contract; or 
 6      (2)  Any other transaction with an end-user licensee if:
 7           (A)  The transaction is for information or
 8                informational rights directed to the general
 9                public as a whole including consumers, under
10                substantially the same terms for the same
11                information;
12           (B)  The licensee acquires the information or rights in
13                a retail transaction under terms and in a quantity
14                consistent with an ordinary transaction in a
15                retail market; and
16           (C)  The transaction is not:
17                (i)  A contract for redistribution or for public
18                     performance or public display of a
19                     copyrighted work;
20               (ii)  A transaction in which the information is
21                     customized or otherwise specially prepared by
22                     the licensor for the licensee other than
23                     minor customization using a capability of the

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 1                     information intended for that purpose;
 2              (iii)  A site license; or
 3               (iv)  An access contract.
 4      "Merchant" means a person that deals in information or
 5 informational rights of the kind or that otherwise by the
 6 person's occupation holds itself out as having knowledge or skill
 7 peculiar to the practices or information involved in the
 8 transaction, or a person to which such knowledge or skill may be
 9 attributed by the person's employment of an agent or broker or
10 other intermediary that by its occupation holds itself out as
11 having such knowledge or skill.
12      "Nonexclusive license" means a license that does not
13 preclude the licensor from transferring to other licensees the
14 same information, informational rights, or contractual rights
15 within the same scope.  The term includes a consignment of a
16 copy.
17      "Notice" of a fact means that the person has actual
18 knowledge of it, has received notice or notification of it, from
19 all the facts and circumstances known to it, has reason to know
20 that the fact exists.
21      "Notify", or "give notice", means to take such steps as may
22 be reasonably required to inform the other person in the ordinary
23 course whether or not the other person actually comes to know of

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 1 it.
 2      "Party", as distinguished from "third party", means a person
 3 that has engaged in a transaction or made an agreement within
 4 this chapter.
 5      "Person" includes an individual or an organization.
 6      "Present value" means the amount, as of a date certain, of
 7 one or more sums payable in the future or the value of one or
 8 more performances due in the future, discounted to the date
 9 certain.  The discount is determined by the interest rate
10 specified by the parties in their agreement unless that rate was
11 manifestly unreasonable when the transaction was entered into.
12 Otherwise, the discount is determined by a commercially
13 reasonable rate that takes into account the circumstances of each
14 case when the agreement was entered into.
15      "Published informational content" means informational
16 content prepared for or made available to recipients generally,
17 or to a class of recipients, in substantially the same form.  The
18 term does not include informational content that is:
19      (1)  Customized for a particular recipient by an individual
20           or group of individuals acting as or on behalf of the
21           licensor, using judgment or expertise; or
22      (2)  Provided in a special relationship of reliance between
23           the provider and the recipient.

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 1      "Reasonable time" means any time which is not manifestly
 2 unreasonable.  What is a reasonable time for taking an act
 3 depends on the nature, purpose, and circumstances of such act.
 4      "Reason to know", with respect to a fact, means that:
 5      (1)  A person has knowledge of the fact; or
 6      (2)  From all the facts and circumstances known to the
 7           person without investigation, the person should be
 8           aware that the fact exists.
 9      "Receive" means:
10      (1)  With respect to a copy, to take delivery; or
11      (2)  With respect to a notice:
12           (A)  To come to a person's attention; or
13           (B)  To be delivered to and available at a location or
14                system designated by agreement for that purpose
15                or, in the absence of an agreed location:
16                (i)  To be delivered at the person's residence, or
17                     the person's place of business through which
18                     the contract was made, or at any other place
19                     held out by the person as a place for receipt
20                     of communications of the kind; or
21               (ii)  In the case of an electronic notification, to
22                     come into existence in an information
23                     processing system in a form capable of being

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 1                     processed by or perceived from a system of
 2                     that type by a recipient, if the recipient
 3                     uses, or otherwise has designated or holds
 4                     out that system or address as a place for
 5                     receipt of notices of the kind and the sender
 6                     does not know that the notice cannot be
 7                     accessed from the particular system of the
 8                     recipient.
 9      "Record" means information that is inscribed on a tangible
10 medium or that is stored in an electronic or other medium and is
11 retrievable in perceivable form.
12      "Release" means an agreement not to object to, or exercise
13 any remedies to limit, the use of information or informational
14 rights, if the agreement requires no affirmative act by the party
15 giving the release to enable or support the other party's use of
16 the information or informational rights.  The term includes a
17 waiver of informational rights.
18      "Return", with respect to information to which a rejected
19 record applies, means:
20      (1)  In the case of a licensee that rejects a record:
21           (A)  With respect to a single information product
22                transferred for a single contract fee,
23                reimbursement of any contract fee paid from the

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 1                person to which it was paid or from another person
 2                that may offer to reimburse that fee, and a right
 3                to stop payment of the contract fee, on proof of
 4                purchase and return of the information and all
 5                copies within a reasonable time after delivery to
 6                the licensee; and
 7           (B)  With respect to an information product provided as
 8                part of multiple information products integrated
 9                into a bundled whole but retaining their separate
10                identity and transferred for one contract fee:
11                (i)  If the record is rejected before or during
12                     the initial use of the bundled product and
13                     that product is returned without further use
14                     and along with all other information products
15                     bundled along with it, reimbursement of the
16                     aggregate contract fee for all bundled
17                     information products, on proof of purchase
18                     and return of all the bundled products and
19                     all copies within a reasonable time after
20                     delivery; or
21               (ii)  If a separate fee was identified by the
22                     licensor as charged to the licensee for a
23                     particular bundled information product,

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 1                     reimbursement of any separate contract fee
 2                     paid for the separate information to which
 3                     the rejected record applies, on proof of
 4                     purchase and return of that information and
 5                     all copies within a reasonable time after
 6                     delivery; and
 7      (2)  In the case of a licensor that rejects a record
 8           proposed by the licensee, a right to receive redelivery
 9           of the information from the licensee, to stop delivery
10           or access to the licensee, and reimbursement from the
11           licensee of amounts paid by the licensor with respect
12           to the rejected record along with reimbursement to the
13           licensee of fees that it paid with respect to the
14           rejected record.
15      "Scope", with respect to a license, means terms defining:
16      (1)  The licensed copies, information, or informational
17           rights involved;
18      (2)  The use or access authorized, prohibited, or
19           controlled;
20      (3)  The geographic area, market, or location; and
21      (4)  The duration of the license.
22      "Seasonable" with respect to an act, means taken within the
23 time agreed or, if no time is agreed, at or within a reasonable

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 1 time.
 2      "Send" means, with any costs provided for and properly
 3 addressed or directed as reasonable under the circumstances or as
 4 otherwise agreed, to (1) deposit in the mail or with a
 5 commercially reasonable carrier, (2) deliver for transmission to
 6 or re-creation in another location or system, or (3) take the
 7 steps necessary to initiate transmission to or re-creation in
 8 another location or system.  In addition, with respect to an
 9 electronic message, the term means to initiate operations that in
10 the ordinary course will cause the record to come into existence
11 in an information processing system in a form capable of being
12 processed by or perceived from a system of that type by the
13 recipient, if the recipient uses or otherwise has designated or
14 held out that system or address as a place for the receipt of
15 communications of the kind.  Receipt within the time in which it
16 would have arrived if properly sent has the effect of a proper
17 sending.
18      "Software" means a computer program, informational content
19 included in the program, and any supporting information provided
20 by the licensor.
21      "Software lease" means a lease of a copy of software,
22 whether or not the lease is a lease under article 2A of the
23 Uniform Commercial Code.

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 1      "Standard form" means a record or a group of related records
 2 containing terms prepared for repeated use in transactions and so
 3 used in a transaction in which there was no negotiation by
 4 individuals except to set the price, quantity, method of payment,
 5 selection among standard options, or time or method of delivery.
 6      "Term", with respect to an agreement or contract, means that
 7 portion of an agreement which relates to a particular matter.
 8      "Termination" means the ending of a contract by either party
 9 pursuant to a power created by agreement or law otherwise than
10 for its breach.
11      "Transfer":
12      (1)  With respect to a contractual interest, includes an
13           assignment of the contract, but does not include an
14           agreement to perform a contractual obligation or
15           exercise contractual rights through a delegate or a
16           sublicensee; and
17      (2)  With respect to computer information, includes a sale
18           or lease of a copy as well as an assignment of
19           informational rights in computer information.
20      "Usage of trade" means any practice or method of dealing
21 that has such regularity of observance in a place, vocation, or
22 trade as to justify an expectation that it will be observed with
23 respect to the transaction in question.

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 1      (b)  The following definitions in the Uniform Commercial
 2 Code apply to this chapter:
 3      "Document of title", section 490:1-201.
 4      "Financial asset", section 490:8-102.
 5      "Funds transfer", section 490:4A-104 (as applied to credit
 6 orders).
 7      "Identification" to the contract, section 490:2-501.
 8      "Instrument", sections 490:9-105(1).
 9      "Item", section 490:4-104.
10      "Investment property", section 490:9-115(1).
11      "Lease", section 490:2A-103.
12      "Letter of credit", section 490:5-103.
13      "Negotiable instrument", section 490:3-104.
14      "Organization", section 490:1-201.
15      "Payment order", section 490:4A-103 (as applied to credit
16 orders).
17      "Purchase", section 490:1-201.
18      "Purchaser", section 490:1-201.
19      "Sale", section 490:2-106.
20      "Security interest", section 490:1-201.
22         -103  Scope; exclusions; agreement that chapter
23 governs.(a)  This chapter applies to computer information

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 1 transactions.
 2      (b)  If a computer information transaction includes other
 3 subject matter, except as provided in subsections (c), (d), and
 4 (e), the following rules apply:
 5      (1)  If the computer information is the primary subject
 6           matter, this chapter applies to the entire transaction;
 7           and
 8      (2)  If the computer information is not the primary subject
 9           matter, this chapter applies only to the part of the
10           transaction pertaining to the computer information.
11      (c)  The following rules apply between this chapter and
12 articles of the Uniform Commercial Code:
13      (1)  If a transaction involves computer information and
14           goods, this chapter applies to the computer
15           information;
16      (2)  Notwithstanding paragraph (1), if a copy of a computer
17           program is contained in and sold or leased as part of
18           other goods, this chapter applies to the program and
19           the copy only if:
20           (A)  The other goods are a computer or computer
21                peripheral; or
22           (B)  Giving the buyer or lessee of the goods access to
23                or use of the program is ordinarily a material

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 1                purpose of transactions in goods of the type;
 2      (3)  To the extent of a conflict between this chapter and
 3           chapter 490, article 9, chapter 490, article 9 governs;
 4           and
 5      (4)  This chapter does not apply to subject matter within
 6           the scope of article 3, 4, 4A, 5, 6, 7, or 8 of the
 7           Uniform Commercial Code.
 8      (d)  This chapter does not apply to:
 9      (1)  A financial services transaction;
10      (2)  A contract to create, perform or perform in, include
11           information in, acquire, use, distribute, modify,
12           reproduce, have access to, adapt, make available,
13           transmit, license, or display:
14           (A)  Audio or visual programming that is provided by
15                broadcast, satellite, or cable as defined or used
16                in the Federal Communications Act and related
17                regulations as they existed on July 1, 1999, or by
18                similar methods of delivering the programming; or
19           (B)  A motion picture, sound recording, musical work,
20                or phonorecord as defined or used in Title 17 of
21                the United States Code as of July 1, 1999, or an
22                enhanced sound recording.  "Enhanced sound
23                recording" means a separately identifiable product

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 1                or service the dominant character of which
 2                consists of recorded sounds, but which includes
 3                (i)  Statements or instructions whose purpose is
 4                     to allow or control the perception,
 5                     reproduction, or communication of those
 6                     sounds; or
 7               (ii)  Other information, so long as recorded sounds
 8                     constitute the dominant character of the
 9                     product or service despite the inclusion of
10                     such other information;
11      (3)  A compulsory license;
12      (4)  A contract of employment of an individual other than as
13           an independent contractor; or
14      (5)  A contract which does not require that the information
15           be furnished as computer information or in which the
16           form of the information as computer information is
17           otherwise de minimis with respect to the primary
18           subject matter of the transaction.
19      (e)  Except as otherwise provided in subsection (c)(2) to
20 (4), if a material part of the subject matter of a transaction
21 includes computer information that is within this chapter or
22 subject matter excluded under subsection (d)(1) or (2), the
23 parties may agree that this chapter, including contract formation

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 1 rules, governs the transaction in whole or in part or that other
 2 law governs the transaction and this chapter does not apply;
 3 however, any agreement to do so is subject to the following
 4 rules:
 5      (1)  An agreement that this chapter governs a transaction
 6           does not alter an otherwise applicable rule or
 7           procedure that may not be varied by agreement or that
 8           may be varied only in a manner specified by the
 9           otherwise applicable rule or procedure and, in a
10           mass-market transaction, does not alter:
11           (A)  The applicability of a consumer protection statute
12                or administrative rule; and
13           (B)  Law applicable to a tangible copy of information
14                in print form;
15      (2)  An agreement that this chapter does not govern a
16           transaction does not alter the applicability of section
17              -217 or    -816 and, in a mass-market transaction,
18           does not alter the applicability of unconscionability,
19           fundamental public policy, or good faith under this
20           chapter; and
21      (3)  In a mass-market transaction any term providing that
22           this chapter does or does not govern must be
23           conspicuous.

Page 26                                                    2373
                                     H.B. NO.           

 1         -104  Supplemental principles: commercial practice;
 2 variation by agreement; good faith; decision for court.(a)
 3 Unless displaced by this chapter, principles of law and equity,
 4 including the law merchant and the common law of this State
 5 relative to capacity to contract, principal and agent, estoppel,
 6 fraud, misrepresentation, duress, coercion, mistake, other
 7 validating or invalidating cause, shall supplement the provisions
 8 of this chapter.  Among the laws supplementing and not displaced
 9 by this chapter are trade secret laws and unfair competition
10 laws.
11      (b)  Any usage of trade in the business, trade, or industry
12 in which the parties are engaged or of which they are or should
13 be aware, along with any course of dealing or course of
14 performance between parties are relevant to determining the
15 existence or meaning of an agreement.
16      (c)  The effect of any provision of this chapter, including
17 an allocation of risk or imposition of a burden, may be varied by
18 agreement of the parties.  However, the following rules apply:
19      (1)  Obligations of good faith, diligence, reasonableness,
20           and care established by this chapter may not be
21           disclaimed by agreement, but the parties may by
22           agreement determine the standards by which the
23           performance of the obligation is to be measured if the

Page 27                                                    2373
                                     H.B. NO.           

 1           standards are not manifestly unreasonable;
 2      (2)  Unconscionability under section    -111 and fundamental
 3           public policy as stated in section    -105(b) may not
 4           be varied by agreement; and
 5      (3)  Limitations on enforceability of, or agreement to, a
 6           contract, term, or right expressly stated in the
 7           sections listed in the following subparagraphs may not
 8           be varied by agreement except to the extent provided in
 9           each section:
10           (A)  Limitations on agreed choice of law in section
11                   -109(a);
12           (B)  Limitations on agreed choice of forum in section
13                   -110;
14           (C)  Limitations in section    -201;
15           (D)  Limitations on a mass-market license in section
16                   -211;
17           (E)  Requirements and return rights for manifest assent
18                and opportunity to review in section    -112;
19           (F)  The consumer defense arising from an electronic
20                error in section    -217;
21           (G)  Requirements for an enforceable term in sections
22                   -303(b),    -307(g),    -406(b)(c), and
23                   804(a);

Page 28                                                    2373
                                     H.B. NO.           

 1           (H)  Restrictions on altering the period of limitations
 2                in section    -805(a) and (b); or
 3           (I)  Limitations on self-help repossession in sections
 4                   -815(b) and    -816.
 5      (d)  Every contract or duty within this chapter imposes an
 6 obligation of good faith in its performance or enforcement.
 7      (e)  Whether a term is conspicuous or is unenforceable under
 8 section    -105(a) or (b) or    -211(a) is a question to be
 9 determined by the court.
10         -105  Relation to federal law; fundamental public
11 policy; transactions subject to other state law.(a)  a
12 provision of this chapter which is preempted by federal law is
13 unenforceable to the extent of the preemption.
14      (b)  If a term of a contract violates a fundamental public
15 policy, the court may refuse to enforce the contract, may enforce
16 the remainder of the contract without the impermissible term, or
17 so limit the application of the impermissible term as to avoid
18 any result contrary to public policy, in each case, to the extent
19 that the interest in enforcement is clearly outweighed by a
20 public policy against enforcement of the term.
21      (c)  Except as otherwise provided in subsection (d), if this
22 chapter conflicts with a consumer protection statute or
23 administrative rule, the conflicting statute or rule governs.

Page 29                                                    2373
                                     H.B. NO.           

 1      (d)  If the law of this State in effect on the effective
 2 date of this chapter applies to a transaction governed by this
 3 chapter, the following rules apply:
 4      (1)  A requirement that a term, waiver, notice, or
 5           disclaimer be in a writing is satisfied by a record;
 6      (2)  A requirement that a record or writing or a term be
 7           signed is satisfied by an authentication;
 8      (3)  A requirement that a term be conspicuous or the like is
 9           satisfied by a term that is conspicuous in accordance
10           with this chapter; and
11      (4)  A requirement of consent or agreement to a term is
12           satisfied by an action that manifests assent to a term
13           in accordance with this chapter.
14         -106  Rules of construction.  In applying this chapter,
15 the following rules of construction apply:
16      (1)  This chapter shall be liberally construed and applied
17           to promote its underlying purposes and policies, which
18           underlying purposes and policies are to:
19           (A)  Support and facilitate the realization of the full
20                potential of computer information transactions;
21           (B)  Clarify the law governing computer information
22                transactions;
23           (C)  Enable expanding commercial practice in computer

Page 30                                                    2373
                                     H.B. NO.           

 1                information transactions by commercial usage and
 2                agreement of the parties; and
 3           (D)  Make the law uniform among the various
 4                jurisdictions;
 5      (2)  Except as otherwise provided in section    -104(c)(3),
 6           the use of mandatory language or the absence of a
 7           phrase such as "unless otherwise agreed" in a provision
 8           of this chapter does not preclude the parties from
 9           varying the effect of the provision by agreement;
10      (3)  The fact that a provision of this chapter imposes a
11           condition for a result does not by itself mean that the
12           absence of that condition yields a different result;
13      (4)  To be enforceable, a term need not be conspicuous,
14           negotiated, or expressly assented or agreed to, unless
15           this chapter expressly so requires; and
16      (5)  Words in the singular include the plural, and in the
17           plural include the singular.
18         -107  Legal recognition of electronic record and
19 authentication; use of electronic agents.(a)  A record or
20 authentication may not be denied legal effect or enforceability
21 solely because it is in electronic form.
22      (b)  This chapter does not require that a record or an
23 authentication be generated, stored, sent, received, or otherwise

Page 31                                                    2373
                                     H.B. NO.           

 1 processed by electronic means or in electronic form.
 2      (c)  In any transaction, a person may establish requirements
 3 regarding the type of authentication or record acceptable to it.
 4      (d)  A person that uses its own electronic agent for
 5 authentication, performance, or agreement, including
 6 manifestation of assent, is bound by the operations of the
 7 electronic agent, even if no individual was aware of or reviewed
 8 the agent's operations or the results of the operations.
 9         -108  Proof and effect of authentication.(a)
10 Authentication may be proven in any manner, including showing
11 that a party made use of information or access that could have
12 been available only if it engaged in conduct or operations that
13 authenticated the record or term.
14      (b)  Subject to section    -215, compliance with a
15 commercially reasonable attribution procedure for authenticating
16 a record authenticates the record as a matter of law.
17         -109  Choice of law.(a)  The parties in their
18 agreement may choose the applicable law.  However, the choice is
19 not enforceable in a consumer contract to the extent it would
20 vary a rule that may not be varied by agreement under the law of
21 the jurisdiction whose law would apply under subsections (b) and
22 (c) in the absence of the agreement.
23      (b)  In the absence of an enforceable choice-of-law term,

Page 32                                                    2373
                                     H.B. NO.           

 1 the following rules apply:
 2      (1)  An access contract or a contract providing for
 3           electronic delivery of a copy is governed by the law of
 4           the jurisdiction in which the licensor is located when
 5           the agreement is made;
 6      (2)  A consumer contract that requires delivery of a copy on
 7           a physical medium is governed by the law of the
 8           jurisdiction in which the copy is or should have been
 9           delivered to the consumer; and
10      (3)  In all other cases, the contract is governed by the law
11           of the jurisdiction having the most significant
12           relationship to the transaction.
13      (c)  In cases governed by subsection (b), if the
14 jurisdiction whose law governs under that subsection is outside
15 the United States, the law of that jurisdiction governs only if
16 it provides substantially similar protections and rights to a
17 party not located in that jurisdiction as are provided under this
18 chapter.  Otherwise, the law of the jurisdiction in the United
19 States which has the most significant relationship to the
20 transaction governs.
21      (d)  For purposes of this section, a party is located at its
22 place of business if it has one place of business, at its chief
23 executive office if it has more than one place of business, or at

Page 33                                                    2373
                                     H.B. NO.           

 1 its place of incorporation or primary registration if it does not
 2 have a physical place of business.  Otherwise, a party is located
 3 at its primary residence.
 4         -110  Contractual choice of forum.(a)  The parties in
 5 their agreement may choose an exclusive judicial forum unless the
 6 choice is unreasonable and unjust.
 7      (b)  A choice-of-forum term is not exclusive unless the
 8 agreement expressly so provides.
 9         -111  Unconscionable contract or term.(a)  If a court
10 as a matter of law finds the contract or any term thereof to have
11 been unconscionable at the time it was made, the court may refuse
12 to enforce the contract, or it may enforce the remainder of the
13 contract without the unconscionable term, or it may so limit the
14 application of any unconscionable term as to avoid any
15 unconscionable result.
16      (b)  If it is claimed or appears to the court that a
17 contract or any term thereof may be unconscionable, the parties
18 must be afforded a reasonable opportunity to present evidence as
19 to its commercial setting, purpose, and effect to aid the court
20 in making the determination.
21         -112  Manifesting assent; opportunity to review.
22 (a)  A person manifests assent to a record or term if the person,
23 acting with knowledge of, or after having an opportunity to

Page 34                                                    2373
                                     H.B. NO.           

 1 review the record or term or a copy of it:
 2      (1)  Authenticates the record or term to adopt or accept it;
 3           or
 4      (2)  Intentionally engages in conduct or makes statements
 5           with reason to know that the other party or its
 6           electronic agent may infer from the conduct or
 7           statement that the person assents to the record or
 8           term.
 9      (b)  An electronic agent manifests assent to a record or
10 term if, after having an opportunity to review, the electronic
11 agent:
12      (1)  Authenticates the record; or
13      (2)  Engages in operations that the circumstances indicate
14           constitute acceptance.
15      (c)  If this chapter or other law requires assent to a
16 specific term, a manifestation of assent must relate specifically
17 to the term.
18      (d)  Conduct or operations manifesting assent may be shown
19 in any manner, including a showing that a person or an electronic
20 agent obtained or used the information or informational rights
21 and that a procedure existed by which a person or an electronic
22 agent must have engaged in the conduct or operations in order to
23 do so.  Proof of compliance with subsection (a)(2) is sufficient

Page 35                                                    2373
                                     H.B. NO.           

 1 if there is conduct that assents and subsequent conduct that
 2 electronically reaffirms assent.
 3      (e)  With respect to an opportunity to review, the following
 4 rules apply:
 5      (1)  A person has an opportunity to review a record or term
 6           only if the record or term is made available in a
 7           manner that ought to call it to the attention of a
 8           reasonable person and permit review;
 9      (2)  An electronic agent has an opportunity to review a
10           record or term only if the record or term is made
11           available in manner that would enable a reasonably
12           configured electronic agent to react to the record or
13           term;
14      (3)  If a record or term is available for review only after
15           a person becomes obligated to pay or begins its
16           performance, the person has an opportunity to review
17           only if:
18           (A)  It had a right to a return if it rejected the
19                record;
20           (B)  The record proposed a modification of contract;
21           (C)  The record provided particulars of performance
22                under section    -305; or
23           (D)  In a case not involving a mass-market license, the

Page 36                                                    2373
                                     H.B. NO.           

 1                parties at the time of contracting had reason to
 2                know that a record or terms would be presented
 3                after performance, use or access to the
 4                information began, unless the performance was mere
 5                delivery or a copy; and
 6      (4)  The right to a return under paragraph (3) may arise by
 7           law or by agreement.
 8      (f)  The provisions of this section may be modified by an
 9 agreement setting out standards applicable to future transactions
10 between the parties.
11                   PART 2.  FORMATION AND TERMS
12                        SUBPART A.  GENERAL
13         -201  Formal requirements.(a)  Except as otherwise
14 provided in this section, a contract requiring payment of $5,000
15 or more is not enforceable by way of action or defense unless:
16      (1)  The party against which enforcement is sought
17           authenticated a record sufficient to indicate that a
18           contract has been formed and which reasonably
19           identifies the copy or subject matter to which the
20           contract refers; or
21      (2)  The contract is a license for an agreed duration of one
22           year or less or which can be terminated at will by the
23           party against which the contract is asserted.

Page 37                                                    2373
                                     H.B. NO.           

 1      (b)  A record is sufficient under subsection (a) even if it
 2 omits or incorrectly states a term, but the contract is not
 3 enforceable beyond the number of copies or subject matter shown
 4 in the record.
 5      (c)  A contract that does not satisfy the requirements of
 6 subsection (a) but which is valid and enforceable in all other
 7 respects, is enforceable if:
 8      (1)  A performance was tendered or the information was made
 9           available by one party and the tender was accepted or
10           accessed by the other; or
11      (2)  The party against which enforcement is sought admits in
12           court, by pleading, testimony, or otherwise under oath,
13           facts sufficient to indicate a contract has been made,
14           but the agreement is not enforceable under this
15           paragraph beyond the number of copies or the subject
16           matter admitted.
17      (d)  Between merchants, if, within a reasonable time, a
18 record in confirmation of the contract and sufficient against the
19 sender is received and the party receiving it has reason to know
20 its contents, the record satisfies subsection (a) against the
21 party receiving it unless notice of objection to its contents is
22 given in a record within ten days after the confirming record is
23 received.

Page 38                                                    2373
                                     H.B. NO.           

 1      (e)  An agreement that the requirements of this section need
 2 not be satisfied as to future transactions is effective if
 3 evidenced in a record authenticated by the person against which
 4 enforcement is sought.
 5      (f)  Except as otherwise provided in section    -105 and
 6 this section, no statute of frauds imposed by any law of this
 7 State applies to a transaction within the scope of this chapter.
 8         -202  Formation in general.(a)  A contract may be
 9 formed in any manner sufficient to show agreement, including
10 offer and acceptance or conduct of both parties or operations of
11 electronic agents which recognize the existence of a contract.
12      (b)  If the parties so intend, an agreement sufficient to
13 constitute a contract may be found even if the time of its making
14 is undetermined, one or more terms are left open or to be agreed
15 on, the records of the parties do not otherwise establish a
16 contract, or one party reserves the right to modify terms.
17      (c)  Even if one or more terms are left open or to be agreed
18 upon, a contract does not fail for indefiniteness if the parties
19 intended to make a contract and there is a reasonably certain
20 basis for giving an appropriate remedy.
21      (d)  In the absence of conduct or performance by both
22 parties to the contrary, a contract is not formed if there is a
23 material disagreement about a material term, including scope.

Page 39                                                    2373
                                     H.B. NO.           

 1      (e)  If a term is to be fixed by later agreement and the
 2 parties intend not to be bound unless the term is so fixed, a
 3 contract is not formed if the parties do not agree to the term.
 4 In that case, each party shall deliver to the other party, or
 5 with the consent of the other party destroy, all copies of
 6 information and other materials already received and refund any
 7 contract fee paid for which performance has not been received.
 8 The parties remain bound by any contractual use restriction with
 9 respect to information or copies received or made and not
10 delivered or deliverable to the other party.
11         -203  Offer and acceptance in general.  Unless otherwise
12 unambiguously indicated by the language or the circumstances:
13      (1)  An offer to make a contract invites acceptance in any
14           manner and by any medium reasonable under the
15           circumstances;
16      (2)  An order or other offer to acquire a copy for prompt or
17           current delivery invites acceptance by either a prompt
18           promise to ship or a prompt or current shipment of a
19           conforming or nonconforming copy.  However, a shipment
20           of nonconforming copies is not an acceptance if the
21           licensor seasonably notifies the licensee that the
22           shipment is offered only as an accommodation to the
23           licensee;

Page 40                                                    2373
                                     H.B. NO.           

 1      (3)  If the beginning of a requested performance is a
 2           reasonable mode of acceptance, an offeror that is not
 3           notified of acceptance within a reasonable time may
 4           treat the offer as having lapsed before acceptance; or
 5      (4)  If an offer in an electronic message evokes an
 6           electronic message in response, a contract is formed:
 7           (A)  When an electronic acceptance is received; or
 8           (B)  If the response consists of beginning performance,
 9                full performance, or giving access to information,
10                when the performance is received or the access is
11                enabled and necessary access materials are
12                received.
13         -204  Acceptance with varying terms.(a)  In this
14 section, an acceptance materially alters an offer if it contains
15 terms that materially conflict with or vary the terms of the
16 offer or that add material terms not contained in the offer.
17      (b)  Except as otherwise provided in section    -205, a
18 definite and seasonable expression of acceptance operates as an
19 acceptance, unless the acceptance materially alters the offer.
20      (c)  If an acceptance materially alters the offer, a
21 contract is not formed unless all other circumstances, including
22 the conduct of the parties, establish a contract.  If a contract
23 is formed, the terms of the contract are determined:

Page 41                                                    2373
                                     H.B. NO.           

 1      (1)  By the terms offered by one party if the other party
 2           agreed, such as by manifesting assent, to those terms
 3           other than in the acceptance that contained the
 4           conflicting, varying, or additional terms; or
 5      (2)  Under section    -212, if paragraph (1) does not apply
 6           and the contract is formed by conduct.
 7      (d)  If the acceptance does not materially alter the offer,
 8 a contract is formed on the terms of the offer.  Terms in the
 9 acceptance that conflict with terms in the offer are not part of
10 the contract.  In addition, the following rules apply:
11      (1)  Additional terms contained in the acceptance are
12           treated as proposals for additional terms; and
13      (2)  Between merchants, the proposed additional terms become
14           part of the contract unless the offeror gives notice of
15           objection before or within a reasonable time after it
16           receives the proposed terms.
17         -205  Conditional offer or acceptance.(a)  Except as
18 otherwise provided in subsection (b), an offer or acceptance
19 that, because of the circumstances or the language, is
20 conditioned on agreement by the other party to the terms of the
21 offer or acceptance, precludes formation of a contract unless the
22 other party agrees to its terms, such as by manifesting assent. 
23      (b)  If an offer and acceptance are in standard forms and
24 one or both are conditioned on acceptance of their terms, the

Page 42                                                    2373
                                     H.B. NO.           

 1 following rules apply:
 2      (1)  Conditional language in a standard term precludes the
 3           formation of a contract only if the party proposing the
 4           form acts in a manner consistent with the language, as
 5           by refusing to perform, refusing to permit performance,
 6           or refusing to accept the benefits of the contract,
 7           until the proposed terms are accepted; and
 8      (2)  A party that agrees, such as by manifesting assent, to
 9           a conditional offer that is effective under paragraph
10           (1) adopts the terms of the offer under section    -210
11           or    -211, except terms of the conditional offer which
12           conflict with any expressly agreed terms on price and
13           quantity.
14         -206  Offer and acceptance; electronic agents.(a)  A
15 contract may be formed by the interaction of electronic agents.
16 If the interaction results in the electronic agents engaging in
17 operations that the circumstances indicate constitute acceptance,
18 a contract is formed but a court may grant appropriate relief if
19 the operations resulted from fraud, electronic mistake, or the
20 like.
21      (b)  A contract may be formed by the interaction of an
22 electronic agent and an individual acting on the individual's own

Page 43                                                    2373
                                     H.B. NO.           

 1 behalf or for another person.  A contract is formed if the
 2 individual takes actions that the individual is free to refuse to
 3 take or makes a statement that the individual has reason to know
 4 will:
 5      (1)  Cause performance, provision of benefits, or allowance
 6           of the use or access that is the subject of the
 7           contract, or result in instructions to a person or an
 8           electronic agent to do so; or
 9      (2)  Indicate acceptance or an offer, regardless of other
10           expressions or actions by the individual to which the
11           individual has reason to know the electronic agent
12           cannot react.
13      (c)  The terms of a contract formed under subsection (b) are
14 determined under section    -210 or    -211, but do not include
15 terms provided by the individual if the individual had reason to
16 know that the electronic agent could not react to the terms as
17 provided.
18         -207  Formation; releases of informational rights. 
19 (a)  A release is effective without consideration if it is:
20      (1)  In a record to which the releasing party agrees, such
21           as by manifesting assent, and which identifies the
22           informational rights released; or
23      (2)  Enforceable under estoppel, implied license, or other

Page 44                                                    2373
                                     H.B. NO.           

 1           rules of law.
 2      (b)  A release continues for the duration of the
 3 informational rights released if the agreement does not specify
 4 its duration and does not require affirmative performance after
 5 the grant of the release by:
 6      (1)  The party granting the release; or
 7      (2)  The party receiving the release, except for relatively
 8           insignificant acts.
 9      (c)  In cases not governed by subsection (b), the duration
10 of a release is governed by section    -308.
11         -208  Formation; submission of information.(a)  The
12 following rules apply to a submission of information for the
13 creation, development, or enhancement of computer information
14 which is not made pursuant to an existing agreement requiring the
15 submission:
16      (1)  A contract is not formed and is not implied from the
17           mere receipt of an unsolicited submission;
18      (2)  Engaging in a business, trade, or industry that by
19           custom or practice regularly acquires ideas is not in
20           itself an express or implied solicitation of the
21           information; and
22      (3)  If the recipient seasonably notifies the person making
23           the submission that the recipient maintains a procedure

Page 45                                                    2373
                                     H.B. NO.           

 1           to receive and review submissions, a contract is formed
 2           only if:
 3           (A)  The submission is made and accepted pursuant to
 4                that procedure; or
 5           (B)  The recipient expressly agrees to terms concerning
 6                the submission.
 7      (b)  An agreement to disclose an idea creates a contract
 8 enforceable against the receiving party only if the idea as
 9 disclosed is confidential, concrete, and novel to the business,
10 trade, or industry or the party receiving the disclosure
11 otherwise expressly agreed.
12                   SUBPART B.  TERMS OF RECORDS
13         -209  Adopting terms of records.(a)  Except as
14 otherwise provided in section    -211, a party adopts the terms
15 of a record, including a standard form, if the party agrees to
16 the record, such as by manifesting assent.
17      (b)  The terms of a record may be adopted as the terms of
18 the contract after beginning performance or use under the
19 agreement, if the parties had reason to know that their agreement
20 would be represented in whole or in part by a later record to be
21 agreed on and there would be no opportunity to review the record
22 or a copy of it before performance or use began.  If the parties
23 fail to agree to terms and did not intend to form a contract

Page 46                                                    2373
                                     H.B. NO.           

 1 unless they agreed, section    -202(e) applies.
 2      (c)  If a party adopts the terms of a record, the terms
 3 become part of the contract without regard to the party's
 4 knowledge or understanding of individual terms in the record,
 5 except for a term that is unenforceable because it fails to
 6 satisfy another requirement of this chapter.
 7         -210  Mass-market license.(a)  A party adopts the
 8 terms of a mass-market license for purposes of this section only
 9 if the party agrees to the license, such as by manifesting
10 assent, before or during the party's initial performance or use
11 of or access to the information.  A term is not part of the
12 license if:
13      (1)  The term is unconscionable under section    -111 or is
14           unenforceable under section    -105(a) or (b); or
15      (2)  Subject to section    -301, the term conflicts with
16           terms to which the parties to the license expressly
17           agreed.
18      (b)  If a licensee does not have an opportunity to review a
19 mass-market license or a copy of it before becoming obligated to
20 pay and does not agree, such as by manifesting assent, to the
21 license after having that opportunity, the licensee is entitled
22 to a return under section    -112 and, in addition, to:
23      (1)  Reimbursement of any reasonable expenses incurred in

Page 47                                                    2373
                                     H.B. NO.           

 1           complying with the licensor's instructions for return
 2           or destruction of the computer information or, in the
 3           absence of instructions, incurred for return postage or
 4           similar reasonable expense in returning it; and
 5      (2)  Compensation for any reasonable and foreseeable costs
 6           of restoring the licensee's information processing
 7           system to reverse changes in the system caused by the
 8           installation, if:
 9           (A)  The installation occurs because information must
10                be installed to enable review of the license; and
11           (B)  The installation alters the system or information
12                in it but does not restore the system or
13                information upon removal of the installed
14                information because of rejection of the license.
15      (c)  In a mass-market transaction, if the licensor does not
16 have an opportunity to review a record with proposed terms before
17 the licensor delivers or becomes obligated to deliver the
18 information, and if the licensor does not agree, such as by
19 manifesting assent, to those terms after having that opportunity,
20 the licensor is entitled to a return.
21         -211  Terms of contract formed by conduct.(a)  Except
22 as otherwise provided in subsection (b) and subject to section
23    -301, if a contract is formed by conduct of the parties, the

Page 48                                                    2373
                                     H.B. NO.           

 1 terms of the contract shall be determined by consideration of the
 2 terms and conditions to which the parties expressly agreed,
 3 course of performance, course of dealing, usage of trade, the
 4 nature of the parties' conduct, the records exchanged, the
 5 information or informational rights involved, the supplementary
 6 terms of this chapter which apply to the transaction, and all
 7 other relevant circumstances.
 8      (b)  This section does not apply if the parties authenticate
 9 a record of the agreement or a party agrees, such as by
10 manifesting assent, to the record of the other party.
11         -212  Pretransaction disclosures in internet-type
12 transactions.  A licensor that makes its computer information
13 available to a licensee electronically from its Internet or
14 similar electronic site affords an opportunity to review the
15 terms of a standard form license that satisfies section
16    -112(e) with respect to a licensee that acquires information
17 from that site, if the licensor:
18      (1)  Makes the standard terms of the license readily
19           available for review by the licensee before the
20           information is delivered or the licensee becomes
21           obligated to pay, whichever comes first, by:
22           (A)  Displaying prominently and in close proximity to a
23                description of the computer information, or to

Page 49                                                    2373
                                     H.B. NO.           

 1                instructions or steps for acquiring it, the
 2                standard terms or a reference to an electronic
 3                location from which they can be readily obtained;
 4                or
 5           (B)  Disclosing the availability of the standard terms
 6                in a prominent place on the site from which the
 7                computer information is offered and promptly
 8                furnishing a copy of the standard terms on request
 9                before the sale or license of the computer
10                information; and
11      (2)  Does not take affirmative steps to prevent printing or
12           storing of the standard terms for archival or review
13           purposes by the licensee.
15         -213  Efficacy and commercial reasonableness of
16 attribution procedure.  The efficacy and commercial
17 reasonableness of an attribution procedure is determined by the
18 court.  In making this determination, the following rules apply:
19      (1)  An attribution procedure established by statute or
20           regulation is commercially reasonable for transactions
21           within the coverage of the statute or regulation;
22      (2)  Except as otherwise provided in paragraph (1),
23           commercial reasonableness is determined in light of the

Page 50                                                    2373
                                     H.B. NO.           

 1           purposes of the procedure and the commercial
 2           circumstances at the time the parties agree to or adopt
 3           the procedure; and
 4      (3)  A commercially reasonable attribution procedure may use
 5           any security device or method that is reasonable under
 6           the circumstances.
 7         -214  Determining attribution of electronic event to
 8 person.(a)  An electronic event is attributed to a person if it
 9 was the act of that person or its electronic agent, or the person
10 is otherwise bound by it under the law of agency or other law.
11 The party relying on attribution of an electronic event to
12 another person has the burden of establishing attribution.
13      (b)  The act of a person may be shown in any manner,
14 including a showing of the efficacy of an attribution procedure.
15      (c)  The effect of an electronic act attributed to a person
16 under subsection (a) is determined from the context and
17 surrounding circumstances at the time of its creation, execution,
18 or adoption, including the parties' agreement, if any, and
19 otherwise as provided by law.
20         -215  Attribution procedure for detection of changes and
21 errors; effect of use.  If there is an attribution procedure
22 between the parties to detect errors or changes in an electronic
23 event and one party conformed to the procedure but the other

Page 51                                                    2373
                                     H.B. NO.           

 1 party did not, and the nonconforming party would have detected
 2 the change or error had that party also conformed, the conforming
 3 party may avoid the effect of the change or error.
 4         -216  Electronic error; consumer defenses.(a)  In this
 5 section, "electronic error" means an error in an electronic
 6 message created by a consumer using an information processing
 7 system when a reasonable method to detect and correct or avoid
 8 the error was not provided.
 9      (b)  In an automated transaction, a consumer is not bound by
10 an electronic message that the consumer did not intend and which
11 was caused by an electronic error, if the consumer:
12      (1)  Promptly on learning of the error:
13           (A)  Notifies the other party of the error; and
14           (B)  Causes delivery to the other party of all copies
15                of the information or, pursuant to reasonable
16                instructions received from the other party,
17                delivers to another person or destroys all copies;
18                and
19      (2)  Has not used or received any benefit from the
20           information or caused the information or benefit to be
21           made available to a third party.
22      (c)  If subsection (b) does not apply, the effect of an
23 error is determined by other law.

Page 52                                                    2373
                                     H.B. NO.           

 1         -217  Electronic message; when effective; effect of
 2 acknowledging.(a)  An electronic message is effective when
 3 received, even if no individual is aware of its receipt.
 4      (b)  Receipt of an electronic acknowledgment of an
 5 electronic message establishes that the message was received, but
 6 by itself does not establish that the content sent corresponds to
 7 the content received.
 8                       PART 3.  CONSTRUCTION
 9                        SUBPART A.  GENERAL
10         -301  Parol or extrinsic evidence.  Terms with respect
11 to which confirmatory records of the parties agree or which are
12 otherwise set forth in a record intended by the parties as a
13 final expression of their agreement with respect to such terms as
14 are included therein may not be contradicted by evidence of any
15 prior agreement or of a contemporaneous oral agreement but may be
16 explained or supplemented by:
17      (1)  Course of performance, course of dealing, or usage of
18           trade; and
19      (2)  Evidence of consistent additional terms, unless the
20           court finds the record to have been intended as a
21           complete and exclusive statement of the terms of the
22           agreement.
23         -302  Practical construction.(a)  The express terms of

Page 53                                                    2373
                                     H.B. NO.           

 1 an agreement and any course of performance, course of dealing,
 2 and usage of trade must be construed whenever reasonable as
 3 consistent with each other.  However, if such construction is
 4 unreasonable:
 5      (1)  Express terms prevail over course of performance,
 6           course of dealing, and usage of trade;
 7      (2)  Course of performance prevails over course of dealing
 8           and usage of trade; and
 9      (3)  Course of dealing prevails over usage of trade.
10      (b)  An applicable usage of trade in the place where any
11 part of performance is to occur must be used in interpreting the
12 agreement as to that part of the performance.
13      (c)  Evidence of a relevant usage of trade, course of
14 performance, or course of dealing offered by one party in a
15 proceeding is not admissible unless and until the party offering
16 the evidence has given the other party notice that the court
17 finds sufficient to prevent unfair surprise.
18      (d)  The existence and scope of a usage of trade are to be
19 proved as facts.
20         -303  Modification and rescission.(a)  An agreement
21 modifying a contract subject to this chapter needs no
22 consideration to be binding.
23      (b)  An authenticated record that precludes modification or

Page 54                                                    2373
                                     H.B. NO.           

 1 rescission except by an authenticated record may not otherwise be
 2 modified or rescinded.  In a standard form supplied by a merchant
 3 to a consumer, a term requiring an authenticated record for
 4 modification of the contract is not enforceable unless the
 5 consumer manifests assent to the term.
 6      (c)  The modification and the contract as modified must
 7 satisfy the requirements of sections    -201(a) and    -307(g) if
 8 the contract as modified is within these provisions.
 9      (d)  An attempt at modification or rescission which does not
10 satisfy subsection (b) or (c) may operate as a waiver if section
11    -702 is satisfied.
12         -304  Continuing contractual terms.(a)  Terms of a
13 contract involving successive performances apply to all
14 performances unless the terms are modified in accordance with
15 this chapter or the contract, even if the terms are not displayed
16 or otherwise brought to the attention of a party with respect to
17 each successive performance.
18      (b)  If a contract provides that terms may be changed as to
19 future performances by compliance with a described procedure, a
20 change proposed in good faith pursuant to that procedure becomes
21 part of the contract if the procedure:
22      (1)  Reasonably notifies the other party of the change; and
23      (2)  In a mass-market transaction, permits the other party

Page 55                                                    2373
                                     H.B. NO.           

 1           to terminate the contract as to future performance if
 2           the change alters a material term and the party in good
 3           faith determines that the modification is unacceptable.
 4      (c)  The parties by agreement may determine the standards
 5 for reasonable notice unless the agreed standards are manifestly
 6 unreasonable in light of the commercial circumstances.
 7         -305  Terms to be specified.  An agreement that is
 8 otherwise sufficiently definite to be a contract is not invalid
 9 because it leaves particulars of performance to be specified by
10 one of the parties.  If particulars of performance are to be
11 specified by a party, the following rules apply:
12      (1)  Specification must be made in good faith and within
13           limits set by commercial reasonableness; and
14      (2)  If a specification materially affects the other party's
15           performance but is not seasonably made, the other
16           party:
17           (A)  Is excused for any resulting delay in its
18                performance; and
19           (B)  May perform, suspend performance, or treat the
20                failure to specify as a breach of contract.
21         -306  Performance under open terms.  A performance
22 obligation of a party that can not be determined from the
23 agreement or from other provisions of this chapter requires the

Page 56                                                    2373
                                     H.B. NO.           

 1 party to perform in a manner and in a time that is reasonable in
 2 light of the commercial circumstances existing at the time of
 3 agreement.
 4                    SUBPART B.  INTERPRETATION
 5         -307  Interpretation and requirements for grant.(a)  A
 6 license grants:
 7      (1)  The rights that are expressly described; and
 8      (2)  The right to use any informational rights within the
 9           licensor's control at the time of contracting which are
10           necessary in the ordinary course to exercise the
11           expressly described rights.
12      (b)  If a license expressly limits use of the information or
13 informational rights, use in any other manner is a breach of
14 contract.  In all other cases, a license contains an implied
15 limitation that the licensee will not use the information or
16 informational rights other than as described in subsection (a).
17 However, use inconsistent with this implied limitation is not a
18 breach if it is permitted under applicable law in the absence of
19 the implied limitation.
20      (c)  An agreement that does not specify the number of
21 permitted users permits a number of users which is reasonable in
22 light of the informational rights involved and the commercial
23 circumstances existing at the time of agreement.

Page 57                                                    2373
                                     H.B. NO.           

 1      (d)  Neither party is entitled to any rights in new versions
 2 of, or improvements or modifications to, information made by the
 3 other party.  A licensor's agreement to provide new versions,
 4 improvements, or modifications requires that the licensor provide
 5 them as developed and made generally commercially available from
 6 time to time by the licensor.
 7      (e)  Neither party is entitled to receive copies of source
 8 code, schematics, master copy, design material, or other
 9 information used by the other party in creating, developing, or
10 implementing the information.
11      (f)  Terms dealing with the scope of an agreement must be
12 construed under ordinary principles of contract interpretation in
13 light of the informational rights and the commercial context.  In
14 addition, the following rules apply:
15      (1)  A grant of "all possible rights and for all media" or
16           "all rights and for all media now known or later
17           developed", or a grant in similar terms, includes all
18           rights then existing or later created by law and all
19           uses, media, and methods of distribution or exhibition,
20           whether then existing or developed in the future and
21           whether or not anticipated at the time of the grant;
22           and
23      (2)  A grant of an "exclusive license", or a grant in

Page 58                                                    2373
                                     H.B. NO.           

 1           similar terms, means that:
 2           (A)  For the duration of the license, the licensor will
 3                not exercise, and will not grant to any other
 4                person, rights in the same information or
 5                informational rights within the scope of the
 6                exclusive grant; and
 7           (B)  The licensor affirms that it has not previously
 8                granted those rights in a contract in effect when
 9                the licensee's rights may be exercised.
10      (g)  The rules of this section may be varied only by a
11 record that is sufficient to indicate that a contract has been
12 made and which is:
13      (1)  Authenticated by the party against which enforcement is
14           sought; or
15      (2)  Prepared and delivered by one party and adopted by the
16           other under section    -210 or    -211.
17         -308  Duration of contract.  If an agreement does not
18 specify its duration, to the extent allowed by other law, the
19 following rules apply:
20      (1)  Except as otherwise provided in paragraph (2) and
21           section    -208, the agreement is enforceable for a
22           time reasonable in light of the licensed subject matter
23           and commercial circumstances but may be terminated as

Page 59                                                    2373
                                     H.B. NO.           

 1           to future performances at will by either party during
 2           that time on giving seasonable notice to the other
 3           party; and
 4      (2)  The duration of contractual rights to use licensed
 5           subject matter is a time reasonable in light of the
 6           licensed informational rights and the commercial
 7           circumstances.  However, subject to cancellation for
 8           breach of contract, the duration of the license is
 9           perpetual as to the contractual rights and contractual
10           use restrictions if:
11           (A)  The license is of a computer program that does not
12                license source code but that transfers ownership
13                of a copy or delivery of a copy for a contract
14                fee, the total amount of which is fixed at or
15                before the time of delivery of the copy; or
16           (B)  The license expressly granted the right to
17                incorporate or use the licensed information or
18                informational rights with information or
19                informational rights from other sources in a
20                combined work for public distribution or public
21                performance.
22         -309  Agreement for performance to party's satisfaction.
23 (a)  Except as otherwise provided in subsection (b), an agreement

Page 60                                                    2373
                                     H.B. NO.           

 1 that provides that the performance of one party is to be to the
 2 satisfaction or approval of the other requires performance
 3 sufficient to satisfy a reasonable person in the position of the
 4 party that must be satisfied.
 5      (b)  Performance must be to the subjective satisfaction of
 6 the other party if:
 7      (1)  The agreement expressly so provides, such as by stating
 8           that approval is in the "sole discretion" of the party,
 9           or words of similar import; or
10      (2)  The agreement is for informational content to be
11           evaluated in reference to subjective characteristics
12           such as aesthetics, appeal, subjective quality,
13           suitability to taste, or similar characteristics.
14                        PART 4.  WARRANTIES
15         -401  Warranty and obligations concerning enjoyment and
16 noninfringement.(a)  A licensor that is a merchant regularly
17 dealing in information of the kind warrants that the information
18 shall be delivered free of the rightful claim of any third person
19 by way of infringement or misappropriation, but a licensee that
20 furnishes detailed specifications to the licensor and the method
21 required for meeting the specifications holds the licensor
22 harmless against any such claim caused by compliance with the
23 specification or method except for a claim that results from the

Page 61                                                    2373
                                     H.B. NO.           

 1 failure of the licensor to adopt, or notify the licensee of, a
 2 noninfringing alternative of which the licensor had reason to
 3 know.
 4      (b)  A licensor warrants:
 5      (1)  For the duration of the contract, that no person holds
 6           a claim to or interest in the information which arose
 7           from an act or omission of the licensor, other than a
 8           claim by way of infringement or misappropriation, which
 9           will interfere with the licensee's enjoyment of its
10           interest; and
11      (2)  As to rights granted exclusively to the licensee, that
12           within the scope of the license and as to other law
13           that applies to the licensed rights:
14           (A)  As to a patent license, to the knowledge of the
15                licensor, the licensed patent rights are valid and
16                exclusive to the extent that exclusivity and
17                validity are recognized; and
18           (B)  In all other cases, the licensed informational
19                rights are valid and exclusive for the information
20                as a whole to the extent that exclusivity and
21                validity are recognized.
22      (c)  The warranties in this section are subject to the
23 following rules:

Page 62                                                    2373
                                     H.B. NO.           

 1      (1)  If informational rights are subject to a right of
 2           privileged use, collective administration, or
 3           compulsory licensing, the warranty is subject to those
 4           rights;
 5      (2)  The obligations under subsections (a) and (b)(2) apply
 6           solely to informational rights arising under the laws
 7           of the United States or a state, or other jurisdiction
 8           of the United States, unless the contract expressly
 9           provides that the scope of the warranty obligations
10           extends to rights under the laws of other countries.
11           Language is sufficient for this purpose if it states
12           "The licensor warrants [exclusivity] [noninfringement]
13           in [specified countries] [worldwide]," or words of
14           similar import.  In that case, the warranty extends to
15           the specified country or, in the case of a general
16           reference to "worldwide" or the like, to all countries
17           within the description, but only to the extent that the
18           rights are recognized under a treaty or international
19           convention to which the country and the United States
20           are signatories; and
21      (3)  The warranties under subsections (a) and (b)(2) are not
22           made in an agreement that merely permits use of rights
23           under a patent.

Page 63                                                    2373
                                     H.B. NO.           

 1      (d)  Except as otherwise provided in subsection (e), a
 2 warranty under this section may be disclaimed or modified only by
 3 specific language or by circumstances that give the licensee
 4 reason to know that the licensor does not warrant that competing
 5 claims do not exist or that the licensor purports to grant only
 6 the rights it may have.  In an automated transaction, language is
 7 sufficient if it is conspicuous.  Otherwise, language in a record
 8 is sufficient if it states "There is no warranty against
 9 interference with your enjoyment of the information or against
10 infringement", or words of similar import.
11      (e)  Between merchants, a grant of a "quitclaim", or a grant
12 in similar terms, grants the information or informational rights
13 without an implied warranty as to infringement or
14 misappropriation or as to the rights actually possessed or
15 transferred by the licensor.
16         -402  Express warranty.(a)  Subject to subsection (c),
17 an express warranty by a licensor is created as follows:
18      (1)  An affirmation of fact or promise made by the licensor
19           to its licensee in any manner, including in a medium
20           for communication to the public such as advertising,
21           which relates to the information and becomes part of
22           the basis of the bargain creates an express warranty
23           that the information to be furnished under the

Page 64                                                    2373
                                     H.B. NO.           

 1           agreement must conform to the affirmation or promise;
 2      (2)  Any description of the information which is made part
 3           of the basis of the bargain creates an express warranty
 4           that the information must conform to the description;
 5           and
 6      (3)  Any sample, model, or demonstration of a final product
 7           which is made part of the basis of the bargain creates
 8           an express warranty that the performance of the
 9           information must reasonably conform to the performance
10           of the sample, model, or demonstration, taking into
11           account such differences as would appear to a
12           reasonable person in the position of the licensee
13           between the sample, model, or demonstration and the
14           information as it will be used.
15      (b)  It is not necessary to the creation of an express
16 warranty that the licensor use formal words such as "warrant" or
17 "guaranty", or state a specific intention to make a warranty.
18 However, an express warranty is not created by:
19      (1)  An affirmation or prediction merely of the value of the
20           information or informational rights;
21      (2)  A display or description of a portion of the
22           information to illustrate the aesthetics, market
23           appeal, or the like, of informational content; or

Page 65                                                    2373
                                     H.B. NO.           

 1      (3)  A statement purporting to be merely the licensor's
 2           opinion or commendation of the information or
 3           informational rights.
 4      (c)  An express warranty or express contractual obligation,
 5 if any, exists with respect to published informational content
 6 covered by this chapter to the same extent that it would exist if
 7 the published informational content had been published in a form
 8 that placed it outside this chapter.  However, if the warranty or
 9 express contractual obligation is breached, the remedies of the
10 aggrieved party are those under this chapter and the agreement.
11         -403  Implied warranty; merchantability of computer
12 program.(a)  Unless the warranty is disclaimed or modified, a
13 merchant licensor of a computer program warrants:
14      (1)  To the end user that the computer program is fit for
15           the ordinary purposes for which such computer programs
16           are used;
17      (2)  To the distributor that:
18           (A)  The program is adequately packaged and labeled as
19                the agreement or the circumstances may require;
20                and
21           (B)  In the case of multiple copies, the copies are
22                within the variations permitted by the agreement,
23                of even kind, quality, and quantity, within each

Page 66                                                    2373
                                     H.B. NO.           

 1                unit and among all units involved; and
 2      (3)  That the program conforms to the promises or
 3           affirmations of fact made on the container or label, if
 4           any.
 5      (b)  Unless disclaimed or modified, other implied warranties
 6 with respect to computer programs may arise from course of
 7 dealing or usage of trade.
 8      (c)  No warranty is created under this section with respect
 9 to informational content, but an implied warranty may arise under
10 section    -404.
11         -404  Implied warranty; informational content.(a)
12 Unless the warranty is disclaimed or modified, a merchant that,
13 in a special relationship of reliance with a licensee, collects,
14 compiles, processes, provides, or transmits informational
15 content, warrants to its licensee that there is no inaccuracy in
16 the informational content caused by the merchant's failure to
17 perform with reasonable care.
18      (b)  A warranty does not arise under subsection (a) with
19 respect to:
20      (1)  Published informational content; or
21      (2)  A person that acts as a conduit or provides only
22           editorial services in collecting, compiling, or
23           distributing informational content identified as that

Page 67                                                    2373
                                     H.B. NO.           

 1           of a third person.
 2      (c)  This warranty is not governed by the preclusion in
 3 section    -104(c)(1) on disclaiming reasonableness and care.
 4         -405  Implied warranty; licensee's purpose; system
 5 integration.(a)  Unless the warranty is disclaimed or modified,
 6 if a licensor at the time of contracting has reason to know any
 7 particular purpose for which the information is required and that
 8 the licensee is relying on the licensor's skill or judgment to
 9 select, develop, or furnish suitable information, the following
10 rules apply:
11      (1)  Except as otherwise provided in paragraph (2), there is
12           an implied warranty that the information is fit for
13           that purpose; and
14      (2)  If from all the circumstances it appears that the
15           licensor was to be paid for the amount of its time or
16           effort regardless of the fitness of the resulting
17           information, the implied warranty is that the
18           information will not fail to achieve the licensee's
19           particular purpose as a result of the licensor's lack
20           of reasonable effort.
21      (b)  There is no warranty under subsection (a) with regard
22 to:
23      (1)  The aesthetics, market appeal, or subjective quality of

Page 68                                                    2373
                                     H.B. NO.           

 1           informational content; or
 2      (2)  Published informational content, but there may be a
 3           warranty with regard to the licensor's selection among
 4           published informational content from different
 5           providers.
 6      (c)  If an agreement requires a licensor to provide or
 7 select a system consisting of computer programs and goods, and
 8 the licensor has reason to know that the licensee is relying on
 9 the skill or judgment of the licensor to select the components of
10 the system, there is an implied warranty that the components
11 provided or selected will function together as a system.
12      (d)  This warranty is not governed by the preclusion in
13 section    -104(c)(1) on disclaiming reasonableness and care.
14         -406  Disclaimer or modification of warranty.(a)
15 Words or conduct relevant to the creation of an express warranty
16 and words or conduct tending to disclaim or modify an express
17 warranty must be construed wherever reasonable as consistent with
18 each other.  Subject to section    -301 with regard to parol or
19 extrinsic evidence, the disclaimer or modification is inoperative
20 to the extent that construction is unreasonable.
21      (b)  Except as otherwise provided in subsections (c), (d),
22 and (e), to disclaim or modify an implied warranty or any part of
23 it, but not the warranty in section    -401, the following rules

Page 69                                                    2373
                                     H.B. NO.           

 1 apply:
 2      (1)  Except as otherwise provided in this subsection:
 3           (A)  To disclaim or modify an implied warranty arising
 4                under section    -403, language in a record must
 5                mention "merchantability" or "quality" or use
 6                words of similar import; and
 7           (B)  To disclaim or modify an implied warranty arising
 8                under section    -404, language in a record must
 9                mention "accuracy" or use words of similar import;
10      (2)  Language to disclaim or modify an implied warranty
11           arising under section    -405 must be in a record.  It
12           is sufficient to state "There is no warranty that this
13           information or efforts will fulfill any of your
14           particular purposes or needs", or words of similar
15           import; and
16      (3)  Language in a record is sufficient to disclaim all
17           implied warranties if it individually disclaims each
18           implied warranty or, except for the warranty in section
19              -401, if it states  "Except for express warranties
20           stated in this contract, if any, this [information]
21           [computer program] is provided with all faults, and the
22           entire risk as to satisfactory quality, performance,
23           accuracy, and effort is with the user", or words of

Page 70                                                    2373
                                     H.B. NO.           

 1           similar import;
 2      (4)  Language sufficient under article 2 or 2A of the
 3           Uniform Commercial Code to disclaim or modify an
 4           implied warranty of merchantability is sufficient to
 5           disclaim or modify the warranties under sections
 6              -403 and    -404.  Language sufficient under article
 7           2 or 2A of the Uniform Commercial Code to disclaim or
 8           modify an implied warranty of fitness for a particular
 9           purpose is sufficient to disclaim or modify the
10           warranties under section    -405; and
11      (5)  Language in a record that disclaims or modifies an
12           implied warranty under sections    -403 and    -405
13           must be conspicuous.
14      (c)  Unless the circumstances indicate otherwise, all
15 implied warranties, but not the warranty in section    -401, are
16 disclaimed by expressions like "as is" or "with all faults" or
17 other language that in common understanding call the licensee's
18 attention to the disclaimer of warranties and makes plain that
19 there are no implied warranties.
20      (d)  If a licensee before entering into a contract has
21 examined the information or the sample or model as fully as it
22 desired or it has refused to examine the information, there is no
23 implied warranty with regard to defects which an examination

Page 71                                                    2373
                                     H.B. NO.           

 1 ought in the circumstances to have revealed to the licensee.
 2      (e)  An implied warranty may also be disclaimed or modified
 3 by course of performance, course of dealing, or usage of trade.
 4      (f)  If a contract requires ongoing performance or a series
 5 of performances by the licensor, language of disclaimer or
 6 modification which complies with this section is effective with
 7 respect to all performances under the contract.
 8      (g)  Remedies for breach of warranty may be limited in
 9 accordance with this chapter with respect to liquidation or
10 limitation of damages and contractual modification of remedy.
11         -407  Modification of computer program.  A licensee that
12 modifies a copy of a computer program, other than by using a
13 capability of the program intended for that purpose in the
14 ordinary course, does not invalidate any warranty regarding
15 performance of an unmodified copy but does invalidate any
16 warranties, express or implied, regarding performance of the
17 modified copy.  A modification occurs if a licensee alters code
18 in, deletes code from, or adds code to the computer program.
19         -408  Cumulation and conflict of warranties. Warranties,
20 whether express or implied, must be construed as consistent with
21 each other and as cumulative, but if that construction is
22 unreasonable, the intention of the parties determines which
23 warranty is dominant.  In ascertaining that intention, the

Page 72                                                    2373
                                     H.B. NO.           

 1 following rules apply:
 2      (1)  Exact or technical specifications displace an
 3           inconsistent sample or model or general language of
 4           description;
 5      (2)  A sample displaces inconsistent general language of
 6           description; and
 7      (3)  Express warranties displace inconsistent implied
 8           warranties other than an implied warranty under section
 9              -405(a).
10         -409  Third-party beneficiaries of warranty.(a)
11 Except for published informational content, a warranty to a
12 licensee extends to persons for whose benefit the licensor
13 intends to supply the information or informational rights and
14 which rightfully use the information in a transaction or
15 application of a kind in which the licensor intends the
16 information to be used.
17      (b)  A warranty to a consumer extends to each individual
18 consumer in the licensee's immediate family or household if the
19 individual's use was reasonably expected by the licensor.
20      (c)  A contractual term that excludes or limits third-party
21 beneficiaries is effective to exclude or limit a contractual
22 obligation or contract liability to third persons except
23 individuals described in subsection (b).

Page 73                                                    2373
                                     H.B. NO.           

 1      (d)  A disclaimer or modification of a warranty or remedy
 2 which is effective against the licensee is also effective against
 3 third persons to which a warranty extends under this section.
 6         -501  Ownership of informational rights.(a)  If an
 7 agreement provides for conveyance of ownership of informational
 8 rights in a computer program, ownership passes at the time and
 9 place specified by the agreement but can not pass until the
10 program is in existence and identified to the contract.  If the
11 agreement does not specify a different time or place, ownership
12 passes when the program and the informational rights are in
13 existence and identified to the contract.
14      (b)  Transfer of a copy does not transfer ownership of
15 informational rights.
16         -502  Title to copy.(a)  In a license:
17      (1)  Title to a copy is determined by the license;
18      (2)  A licensee's right under the license to possession or
19           control of a copy is governed by the license and does
20           not depend solely on title to the copy; and
21      (3)  If a licensor reserves title to a copy, the licensor
22           retains title to that copy and any copies made of it,
23           unless the license grants the licensee a right to make

Page 74                                                    2373
                                     H.B. NO.           

 1           and sell copies to others, in which case the
 2           reservation of title applies only to copies delivered
 3           to the licensee by the licensor.
 4      (b)  If an agreement provides for transfer of title to a
 5 copy, title passes:
 6      (1)  At the time and place specified in the agreement; or
 7      (2)  In the absence of such specification:
 8           (A)  At the time and place the licensor completed its
 9                obligations with respect to delivery of a copy on
10                a tangible medium; and
11           (B)  At the time and place at which the licensor
12                completed its obligations with respect to
13                electronic delivery of a copy if a first sale
14                occurs under federal copyright law.
15      (c)  If the party to which title passes under the contract
16 refuses delivery of the copy or rejects the terms of the
17 agreement, title revests in the licensor.
18         -503  Transfer of contractual interest.  The following
19 rules apply to a transfer of a contractual interest:
20      (1)  A party's interest in a contract may be transferred
21           unless the transfer:
22           (A)  Is prohibited under other law; or
23           (B)  Would materially change the duty of the other

Page 75                                                    2373
                                     H.B. NO.           

 1                party, materially increase the burden or risk
 2                imposed on the other party, or materially impair
 3                the other party's property or its likelihood or
 4                expectation of obtaining return performance;
 5      (2)  Except as provided in section    -508(a)(1)(B), a term
 6           prohibiting transfer of a party's interest is
 7           enforceable, and a transfer made in violation of that
 8           term is a breach of contract and is ineffective except
 9           to the extent that:
10           (A)  The contract is a license for incorporation or use
11                of the licensed information or informational
12                rights with information or informational rights
13                from other sources in a combined work for public
14                distribution or public performance and the
15                transfer is of the completed, combined work; or
16           (B)  The transfer of a right to payment arising out of
17                the transferor's due performance of less than its
18                entire obligation would be enforceable under
19                paragraph (1) in the absence of the contractual
20                term prohibiting transfer;
21      (3)  A right to damages for breach of the whole contract or
22           a right arising out of the transferor's due performance
23           if the entire obligation can be transferred

Page 76                                                    2373
                                     H.B. NO.           

 1           notwithstanding paragraph (1)(B) or an agreement
 2           otherwise; and
 3      (4)  A term which prohibits transfer of a mass-market
 4           license must be conspicuous.
 5         -504  Effect of transfer of contractual rights.(a)  A
 6 transfer of "the contract" or of "all my rights under the
 7 contract", or a transfer in similar general terms, is a transfer
 8 of all contractual rights.  Whether the transfer is effective is
 9 determined under sections    -503 and    -508(a)(1)(B).
10      (b)  The following rules apply to a transfer of a party's
11 contractual rights:
12      (1)  The transferee is subject to all contractual use
13           restrictions;
14      (2)  Unless the language or circumstances otherwise
15           indicate, as in a transfer as security, the transfer
16           delegates the duties of the transferor and transfers
17           its rights;
18      (3)  Acceptance of the transfer is a promise by the
19           transferee to perform the delegated duties.  The
20           promise is enforceable by the transferor and any other
21           party to the original contract; and
22      (4)  The transfer does not relieve the transferor of any
23           duty to perform, or of liability for breach of

Page 77                                                    2373
                                     H.B. NO.           

 1           contract, unless the other party to the original
 2           contract agrees that the transfer has that effect.
 3      (c)  A party to the original contract other than the
 4 transferor may treat a transfer that conveys a right or duty of
 5 performance without its consent as creating reasonable grounds
 6 for insecurity and, without prejudice to the party's rights
 7 against the transferor, may demand assurances from the transferee
 8 pursuant to section    -709.
 9         -505  Performance by a delegate; subcontract.(a)  A
10 party may perform its contractual duties or exercise its rights
11 through a delegate or a subcontract unless:
12      (1)  The contract prohibits delegation or subcontracting; or
13      (2)  The other party has a substantial interest in having
14           the original promisor perform or control the
15           performance.
16      (b)  Delegating or subcontracting performance does not
17 relieve the party delegating or subcontracting the performance of
18 a duty to perform or of liability for breach.
19      (c)  An attempted delegation that violates a term that
20 prohibits delegation is not effective.
21         -506  Transfer by licensee.(a)  If all or any part of
22 a licensee's interest in a license is transferred, voluntarily or
23 involuntarily, the transferee acquires no interest in

Page 78                                                    2373
                                     H.B. NO.           

 1 information, copies, or the contractual or informational rights
 2 of the licensee unless the transfer is effective under section
 3    -503.  If the transfer is effective, the transferee takes
 4 subject to the terms of the license.
 5      (b)  Except as otherwise provided under trade secret law, a
 6 transferee acquires no more than the contractual or other rights
 7 its transferor was authorized to transfer.
 9         -507  Financing where financier does not become
10 licensee.  If a financier does not become a licensee, the
11 following rules apply:
12      (1)  The financier does not receive the benefits or burdens
13           of the license; and
14      (2)  The licensee's rights and obligations with respect to
15           the information and informational rights are governed
16           by:
17           (A)  The license;
18           (B)  Any rights of the licensor under other applicable
19                law; and
20           (C)  To the extent not inconsistent with subparagraphs
21                (A) and (B), any agreement between the financier
22                and the licensee, which may add additional
23                conditions to the licensee's right to use the

Page 79                                                    2373
                                     H.B. NO.           

 1                licensed information or informational rights.
 2         -508  Finance licenses.(a)  If a financier becomes a
 3 licensee and then transfers the license, or sublicenses the
 4 information or informational rights, to a licensee receiving the
 5 financial accommodation, the following rules apply:
 6      (1)  The transfer or sublicense to the accommodated licensee
 7           is not effective unless:
 8           (A)  The transfer or sublicense is effective under
 9                section    -503; or
10           (B)  The following conditions are fulfilled:
11                (i)  Before the licensor delivered the information
12                     or granted the license to the financier, the
13                     licensor received notice in a record from the
14                     financier giving the name and location of the
15                     accommodated licensee and clearly indicating
16                     that the license was being obtained in order
17                     to transfer or sublicense it to the
18                     accommodated licensee;
19               (ii)  The financier became a licensee solely to
20                     make the financial accommodation; and
21              (iii)  The accommodated licensee adopts the terms of
22                     the license, as supplemented by the financial
23                     accommodation contract, to the extent the

Page 80                                                    2373
                                     H.B. NO.           

 1                     modifications are not inconsistent with the
 2                     license contract and any rights of the
 3                     licensor under other law; and
 4      (2)  A financier that makes a transfer that is effective
 5           under paragraph (1)(B) may make only the single
 6           transfer of rights under the license contemplated by
 7           the notice unless the licensor consents to a later
 8           transfer.
 9      (b)  If a financier makes an effective transfer of a
10 license, or an effective sublicense of the information or
11 informational rights subject to the license, to an accommodated
12 licensee, the following rules apply:
13      (1)  The accommodated licensee's rights and obligations are
14           governed by:
15           (A)  The license;
16           (B)  Any rights of the licensor under other applicable
17                law; and
18           (C)  To the extent not inconsistent with subparagraphs
19                (A) and (B), the financial accommodation contract,
20                which may impose additional conditions to the
21                licensee's right to use the licensed information
22                or informational rights; and
23      (2)  The financier makes no warranties to the accommodated

Page 81                                                    2373
                                     H.B. NO.           

 1           licensee other than the warranty under section
 2              -401(b)(1) and any express warranties in the
 3           financial accommodation contract.
 4         -509  Financing arrangements; obligations irrevocable.
 5 Unless the accommodated licensee is a consumer, a term in the
 6 financial accommodation contract that the accommodated licensee's
 7 obligations are irrevocable and independent is enforceable.  The
 8 obligations become irrevocable and independent upon the
 9 licensee's acceptance of the license or the giving of value by
10 the financier.
11         -510  Financing arrangements; remedies or enforcement.
12 (a)  Except as otherwise provided in subsection (b), on material
13 breach of a financial accommodation contract by the accommodated
14 licensee, the following rules apply:
15      (1)  The financier may cancel the financial accommodation
16           contract;
17      (2)  Subject to paragraphs (3) and (4), the financier may
18           pursue its remedies against the accommodated licensee
19           under the financial accommodation contract;
20      (3)  If the financier became a licensee and made a transfer
21           or sublicense that was effective under section    -508,
22           it may exercise the remedies of a licensor under this
23           chapter, including the rights of an aggrieved party

Page 82                                                    2373
                                     H.B. NO.           

 1           under section    -815, subject to the limitations of
 2           section    -816; and
 3      (4)  If the financier did not become a licensee, it may
 4           enforce a contractual right to preclude the licensee's
 5           further use of the information.  The financier has no
 6           right to take possession, use the information or
 7           informational rights, or transfer the license.  If the
 8           accommodated licensee agreed to transfer possession to
 9           the financier in the event of breach, the financier may
10           enforce that contractual right only if the licensor
11           consents or if a transfer would be effective under
12           section    -503.
13      (b)  The following additional limitations apply to a
14 financier's remedies under subsection (a):
15      (1)  A financier entitled under the financial accommodation
16           contract to take possession or prevent use of the
17           information, copies, or related materials may do so
18           only if the licensor consents or if doing so would not
19           result in a material adverse change of the duty of the
20           licensor, materially increase the burden or risk
21           imposed on the licensor, disclose or threaten to
22           disclose trade secrets or confidential material of the
23           licensor, or materially impair the licensor's

Page 83                                                    2373
                                     H.B. NO.           

 1           likelihood or expectation of obtaining return
 2           performance;
 3      (2)  The financier may not otherwise exercise control over,
 4           have access to, or sell, transfer, or otherwise use the
 5           information or copies without the consent of the
 6           licensor unless the financier or transferee is subject
 7           to the terms of the license and:
 8           (A)  The licensee owns the title to the licensed copy,
 9                the license does not preclude transfer of the
10                licensee's rights, and the transfer complies with
11                federal copyright law for the owner of a copy to
12                make the transfer; or
13           (B)  The license is transferable by its express terms
14                and the financier fulfills any conditions to, or
15                complies with any restrictions on, transfer; and
16      (3)  The financier's remedies under the financial
17           accommodation contract are subject to the licensor's
18           rights and the terms of the license.
19         -511  Financing arrangements; miscellaneous rules.(a)
20 The creation of a financier's interest does not place any
21 obligations on or alter the rights of a licensor.
22      (b)  A financier's interest does not attach to any
23 intellectual property rights of the licensor unless the licensor

Page 84                                                    2373
                                     H.B. NO.           

 1 expressly consents to the interest in a license or another
 2 record.
 3                       PART 6.  PERFORMANCE
 4                        SUBPART A.  GENERAL
 5         -601  Performance of contract in general.(a)  A party
 6 shall perform in a manner that conforms to the contract.
 7      (b)  If there is an uncured material breach of contract by a
 8 party which precedes the aggrieved party's performance, the
 9 aggrieved party does not have a duty to perform other than with
10 respect to contractual use restrictions.  In addition, the
11 following rules apply:
12      (1)  The aggrieved party may refuse a performance that is a
13           material breach as to that performance or that may be
14           refused under section    -704(b); and
15      (2)  The aggrieved party may cancel the contract only if the
16           breach is a material breach of the whole contract or
17           the agreement so provides.
18      (c)  Except as otherwise provided in subsection (b), tender
19 of performance by a party entitles the party to acceptance of
20 that performance.  In addition, the following rules apply:
21      (1)  A tender of performance occurs when the party, with
22           manifest present ability and willingness to perform,
23           offers to complete the performance;

Page 85                                                    2373
                                     H.B. NO.           

 1      (2)  If a performance by the other party is due at the time
 2           of the tendered performance, tender of the other
 3           party's performance is a condition to the tendering
 4           party's obligation to complete its tendered
 5           performance; and
 6      (3)  A party shall pay or render the consideration required
 7           by the agreement for a performance it accepts.  A party
 8           that accepts a performance has the burden of proving a
 9           breach with respect to the accepted performance.
10      (d)  Except as otherwise provided in sections    -603 and
11    -604, in the case of a performance with respect to a copy,
12 sections    -606 to    -610 and sections    -704 to    -707
13 prevail over this section.
14         -602  Licensor's obligations to enable use.(a)  In
15 this section, "enable use" means to grant a contractual right or
16 permission with respect to information or informational rights
17 and to complete the acts, if any, required under the agreement to
18 make the information available to a party.
19      (b)  A licensor shall enable use by the licensee pursuant to
20 the contract.  The following rules apply to enabling use:
21      (1)  If nothing other than the grant of a contractual right
22           or permission is required to enable use, the licensor
23           enables use when the contract becomes enforceable;

Page 86                                                    2373
                                     H.B. NO.           

 1      (2)  If the agreement requires delivery of a copy, enabling
 2           use occurs when the copy is delivered.  If the
 3           agreement requires delivery of a copy and steps
 4           authorizing the licensee's use, enabling use occurs
 5           when the last of those steps occurs;
 6      (3)  In an access contract, to enable use requires
 7           furnishing all access material necessary to obtain the
 8           agreed access; and
 9      (4)  If the agreement requires a transfer of ownership of
10           informational rights and a filing or recording is
11           allowed by law to establish priority of the transferred
12           ownership, on request by the licensee, the licensor
13           shall execute and deliver a record for that purpose.
14         -603  Submissions of information to satisfaction of
15 party.  If an agreement requires that the submission of
16 information be to the satisfaction of the recipient, the
17 following rules apply:
18      (1)  Sections    -606 to    -610 and sections    -704 to
19              -707 do not apply to the submission;
20      (2)  If the information is not satisfactory to the recipient
21           and the parties engage in efforts to correct the
22           deficiencies in a manner and over a time consistent
23           with the ordinary standards of the business, trade, or

Page 87                                                    2373
                                     H.B. NO.           

 1           industry, the efforts or the passage of time required
 2           for the effort are neither an acceptance nor refusal of
 3           the submission;
 4      (3)  Except as otherwise provided in paragraph (4), neither
 5           refusal nor acceptance occurs unless the recipient
 6           expressly refuses or accepts the submission, but the
 7           recipient may not use the submission before acceptance;
 8           and
 9      (4)  Silence and a failure to act in reference to a
10           submission beyond a commercially reasonable time to
11           respond entitles the submitting party to demand in a
12           record delivered to the recipient a decision on the
13           submission.  If the recipient fails to respond within a
14           reasonable time after receipt of the demand, the
15           submission is deemed to have been refused.
16         -604  Immediately completed performance.  If a
17 performance involves delivery of information or services covered
18 by this chapter which, because of their nature, may provide a
19 licensee immediately with substantially all the benefit of the
20 performance or with other significant benefit on performance or
21 delivery that cannot be returned after received, the following
22 rules apply:
23      (1)  Sections    -607 to    -610 and sections    -704 to

Page 88                                                    2373
                                     H.B. NO.           

 1              -707 do not apply;
 2      (2)  The rights of the parties are determined under section
 3              -601 and the ordinary standards of the business,
 4           trade, or industry; and
 5      (3)  Before tender of the performance, a party may inspect
 6           the media, labels, or packaging but may not view the
 7           information or otherwise receive the performance before
 8           completing any performance of its own that is then due.
 9         -605  Electronic regulation of performance.(a)  In
10 this section, "restraint" means a program, code, device, or
11 similar electronic or physical limitation the intended purpose of
12 which is to restrict use of information.
13      (b)  A party entitled to enforce a limitation on use of
14 information which does not depend on a breach of contract by the
15 other party may include a restraint in the information or a copy
16 of it and use that restraint if:
17      (1)  A term of the agreement authorizes use of the
18           restraint;
19      (2)  The restraint prevents a use that is inconsistent with
20           the agreement or with informational rights that were
21           not granted to the licensee;
22      (3)  The restraint prevents use after expiration of the
23           stated duration of the contract or a stated number of

Page 89                                                    2373
                                     H.B. NO.           

 1           uses; or
 2      (4)  The restraint prevents use after the contract
 3           terminates, other than on expiration of a stated
 4           duration or number of uses, and the licensor gives
 5           reasonable notice to the licensee before further use is
 6           prevented.
 7      (c)  This section does not authorize a restraint that
 8 affirmatively prevents or makes impracticable a licensee's access
 9 to its own information or information of a third party, other
10 than the licensor, if that information is in the licensee's
11 possession and accessed without use of the licensor's information
12 or informational rights.
13      (d)  A party that includes or uses a restraint pursuant to
14 subsection (b) or (c) is not liable for any loss caused by the
15 use.
16      (e)  This section does not preclude electronic replacement
17 or disabling of an earlier copy of information by the licensor in
18 connection with delivery of a new copy or version under an
19 agreement electronically to replace or disable the earlier copy
20 with an upgrade or other new information.
21      (f)  This section does not authorize use of a restraint to
22 enforce remedies in the event of breach of contract.

Page 90                                                    2373
                                     H.B. NO.           

 1         -606  Copy; delivery; tender of delivery.(a)  Delivery
 2 of a copy must be at the location designated by agreement, but,
 3 in the absence of a designation, the following rules apply:
 4      (1)  The place for delivery of a copy on a physical medium
 5           is the tendering party's place of business or, if it
 6           has none, its residence.  However, if the parties know
 7           at the time of contracting that the copy is located in
 8           some other place, that place is the place for delivery;
 9      (2)  The place for electronic delivery of a copy is an
10           information processing system designated by the
11           licensor; and
12      (3)  Documents of title may be delivered through customary
13           banking channels.
14      (b)  Tender of delivery of a copy requires the tendering
15 party to put and hold a conforming copy at the other party's
16 disposition and give the other party any notice reasonably
17 necessary to enable it to obtain access, control, or possession
18 of the copy.  Tender must be at a reasonable hour and, if
19 applicable, requires the tender of access material and other
20 documents required by the agreement.  The party receiving tender
21 shall furnish facilities reasonably suited to receive tender.  In
22 addition, the following rules apply:
23      (1)  If the contract requires delivery of a copy held by a

Page 91                                                    2373
                                     H.B. NO.           

 1           third person without being moved, the tendering party
 2           shall tender access material or documents required by
 3           the agreement;
 4      (2)  If the tendering party is required or authorized to
 5           send a copy to the other party and the contract does
 6           not require the tendering party to deliver the copy at
 7           a particular destination, the following rules apply:
 8           (A)  In tendering delivery of a copy on a physical
 9                medium, the tendering party shall put the copy in
10                the possession of a carrier and make a contract
11                for its transportation that is reasonable in light
12                of the nature of the information and other
13                circumstances, with expenses of transportation to
14                be borne by the receiving party; and
15           (B)  In tendering electronic delivery of a copy, the
16                tendering party shall initiate a transmission that
17                is reasonable in light of the nature of the
18                information and other circumstances, with expenses
19                of transmission to be borne by the receiving
20                party; and
21      (3)  If the tendering party is required to deliver a copy at
22           a particular destination, the party shall make a copy
23           available at that destination and bear the expenses of

Page 92                                                    2373
                                     H.B. NO.           

 1           transportation or transmission.
 2         -607  Copy; performance related to delivery; payment.
 3 If performance requires delivery of a copy:
 4      (1)  The party required to deliver need not complete a
 5           tendered delivery until the receiving party tenders any
 6           performance then due;
 7      (2)  Tender of delivery is a condition of the other party's
 8           duty to accept the copy;
 9      (3)  Tender entitles the tendering party to acceptance of
10           the copy;
11      (4)  If payment is due on delivery of a copy, the following
12           rules apply:
13           (A)  Tender of delivery is a condition of the receiving
14                party's duty to pay;
15           (B)  Tender entitles the tendering party to payment
16                according to the contract; and
17           (C)  All copies required by the contract must be
18                tendered in a single delivery, and payment is due
19                only on tender;
20      (5)  If the circumstances give either party the right to
21           make or demand delivery in lots, the contract fee, if
22           it can be apportioned, may be demanded for each lot;
23           and

Page 93                                                    2373
                                     H.B. NO.           

 1      (6)  If payment is due and demanded on delivery of a copy or
 2           on delivery of a document of title, the right of the
 3           party receiving tender to retain or dispose of the copy
 4           or document, as against the tendering party, is
 5           conditional on making the payment due.
 6         -608  Copy; right to inspect; payment before inspection.
 7 (a)  Except as otherwise provided in sections    -603 and
 8    -604, if performance requires delivery of a copy, the
 9 following rules apply:
10      (1)  Except as otherwise provided in this section, the party
11           receiving the copy has a right before payment or
12           acceptance to inspect at a reasonable place and time
13           and in a reasonable manner to determine conformance to
14           the contract;
15      (2)  The party making the inspection shall bear the expenses
16           of inspection;
17      (3)  A place or method of inspection or an acceptance
18           standard fixed by the parties is presumed to be
19           exclusive.  However, the fixing of a place, method, or
20           standard does not postpone identification to the
21           contract or shift the place for delivery, passage of
22           title, or risk of loss.  If compliance with the place
23           or method becomes impossible, inspection must be made

Page 94                                                    2373
                                     H.B. NO.           

 1           as provided in this section unless the place or method
 2           fixed by the parties was an indispensable condition the
 3           failure of which avoids the contract; and
 4      (4)  A party's right to inspect is subject to existing
 5           obligations of confidentiality.
 6      (b)  If a right to inspect exists under subsection (a) but
 7 the agreement is inconsistent with an opportunity to inspect
 8 before payment, the party does not have a right to inspect before
 9 payment.
10      (c)  If the contract requires payment before inspection of a
11 copy, nonconformity in the tender does not excuse the party
12 receiving the tender from making payment unless:
13      (1)  The nonconformity appears without inspection and would
14           justify refusal under section    -609; or
15      (2)  Despite tender of the required documents, the
16           circumstances would justify an injunction against honor
17           of a letter of credit under article 5 of the Uniform
18           Commercial Code.
19      (d)  Payment made under the circumstances described in
20 subsection (b) or (c) is not an acceptance of the copy and does
21 not impair a party's right to inspect or preclude any of the
22 party's remedies.
23         -609  Copy; when acceptance occurs.(a)  Acceptance of

Page 95                                                    2373
                                     H.B. NO.           

 1 a copy occurs when the party to which the copy is tendered:
 2      (1)  Signifies, or acts with respect to the copy in a manner
 3           that signifies, that the tender was conforming or that
 4           the party will take or retain the copy in spite of a
 5           nonconformity;
 6      (2)  Fails to make an effective refusal;
 7      (3)  Commingles the copy or the information in a manner that
 8           makes compliance with the party's duties after refusal
 9           impossible;
10      (4)  Substantially obtains the benefit from the copy and can
11           not return that benefit; or
12      (5)  Acts in a manner inconsistent with the licensor's
13           ownership, but any such act is an acceptance only if
14           the licensor elects to treat it as an acceptance and
15           ratifies the act to the extent it was within
16           contractual use restrictions.
17      (b)  Except in cases governed by subsection (a)(3) or (4),
18 if there is a right to inspect under section    -608 or the
19 agreement, acceptance of a copy occurs only after the party has
20 had a reasonable opportunity to inspect.
21      (c)  If an agreement requires delivery in stages involving
22 separate portions which taken together comprise the whole of the
23 information, acceptance of any stage is conditional until

Page 96                                                    2373
                                     H.B. NO.           

 1 acceptance of the whole.
 2         -610  Copy; effect of acceptance.(a)  A party
 3 accepting a copy shall pay or render the consideration required
 4 by the agreement for the copy it accepts.  Acceptance of a copy
 5 precludes refusal and, if made with knowledge of a nonconformity
 6 in the tender, may not be revoked because of it unless acceptance
 7 was on the reasonable assumption that the nonconformity would be
 8 seasonably cured.  Acceptance does not by itself impair any other
 9 remedy for nonconformity.
10      (b)  The party accepting a copy has the burden of proving a
11 breach of contract with respect to the copy.
12      (c)  If a copy has been accepted, the accepting party shall:
13      (1)  Except with respect to claims of a type described in
14           section    -805(d)(1), within a reasonable time after
15           it discovers or should have discovered any breach,
16           notify the other party of a breach or be barred from
17           any remedy for that breach; and
18      (2)  If the claim is for breach of an obligation regarding
19           noninfringement and the accepting party is sued by a
20           third party because of the breach, notify the other
21           party within a reasonable time after receiving notice
22           of the litigation or be precluded from any remedy over
23           for the liability established by the litigation.

Page 97                                                    2373
                                     H.B. NO.           

 2         -611  Access contracts.(a)  If an access contract
 3 provides for access over time, the licensee's rights of access
 4 are to the information as modified and made commercially
 5 available by the licensor from time to time during that period.
 6 In addition, the following rules apply:
 7      (1)  A change in the content of the information is a breach
 8           of contract only if the change conflicts with an
 9           express term of the agreement;
10      (2)  Unless it is subject to a contractual use restriction,
11           information obtained by the licensee is free of any use
12           restriction other than a restriction resulting from the
13           informational rights of another person or other
14           applicable law; and
15      (3)  Access must be available at times and in a manner:
16           (A)  Conforming to the express terms of the agreement;
17                and
18           (B)  To the extent not expressly stated in the
19                agreement, at times and in a manner that is
20                reasonable for the particular type of contract in
21                light of the ordinary standards of the business,
22                trade, or industry.
23      (b)  In an access contract that gives the licensee a right

Page 98                                                    2373
                                     H.B. NO.           

 1 of access at times substantially of its own choosing during
 2 agreed periods, an occasional failure to have access available
 3 during those times is not a breach of contract if it is:
 4      (1)  Consistent with ordinary standards of the business,
 5           trade, or industry for the particular type of contract;
 6           or
 7      (2)  Caused by:
 8           (A)  Scheduled downtime;
 9           (B)  Reasonable needs for maintenance;
10           (C)  Reasonable periods of equipment, software, or
11                communications failure; or
12           (D)  Events reasonably beyond the licensor's control,
13                and the licensor exercises such commercially
14                reasonable efforts as the circumstances require.
15         -612  Correction and support agreements.(a)  If a
16 person agrees to correct performance problems or provide similar
17 services with respect to information other than as an effort to
18 cure its own breach of contract, the following rules apply:
19      (1)  Except as otherwise provided in paragraph (2), the
20           person:
21           (A)  Shall perform at a time and place and in a manner
22                consistent with the express terms of the agreement
23                and, to the extent not stated in the express

Page 99                                                    2373
                                     H.B. NO.           

 1                terms, at a time and place and in a manner that is
 2                reasonable in light of ordinary standards of the
 3                business, trade, or industry; and
 4           (B)  Does not undertake that its services will correct
 5                all performance problems unless the agreement
 6                expressly so provides; and
 7      (2)  If the services are provided by a licensor of the
 8           information as part of a limited remedy, the licensor
 9           undertakes that its performance will provide the
10           licensee with information that conforms to the
11           agreement to which the limited remedy applies.
12      (b)  A licensor is not required to provide instruction or
13 other support for the licensee's use of information or access.  A
14 person that agrees to provide support shall make the support
15 available in a manner and with a quality consistent with express
16 terms of the support agreement and, to the extent not stated in
17 the express terms, at a time and place and in a manner that is
18 reasonable in light of ordinary standards of the business, trade,
19 or industry.
20         -613  Contracts involving publishers, dealers, and end
21 users.(a)  In this section:
22      "Dealer" means a merchant licensee that receives information
23 directly or indirectly from a licensor for sale or license to end

Page 100                                                   2373
                                     H.B. NO.           

 1 users.
 2      "End user" means a licensee that acquires a copy of the
 3 information from a dealer by delivery on a physical medium for
 4 the licensee's own use and not for sale, license, transmission to
 5 third parties, or public display or performance for a fee.
 6      "Publisher" means a licensor, other than a dealer, that
 7 offers a license to an end user with respect to information
 8 distributed by a dealer to the end user.
 9      (b)  In a contract between a dealer and an end user, if the
10 end user's right to use the information or informational rights
11 is subject to a license from the publisher and there was no
12 opportunity to review the license before the end user became
13 obligated to pay the dealer, the following rules apply:
14      (1)  The contract between the end user and the dealer is
15           conditioned on the end user's agreement to the
16           publisher's license;
17      (2)  If the end user does not agree, such as by manifesting
18           assent, to the terms of the publisher's license, the
19           end user has a right to a return from the dealer. A
20           right under this paragraph is a return for purposes of
21           sections    -211 and    -112(e); and
22      (3)  The dealer is not bound by the terms, and does not
23           receive the benefits, of an agreement between the

Page 101                                                   2373
                                     H.B. NO.           

 1           publisher and the end user unless the dealer and end
 2           user adopt those terms as part of their agreement.
 3      (c)  If an agreement provides for distribution of copies on
 4 a physical medium or in packaging provided by the publisher or
 5 authorized third party, a dealer may distribute those copies and
 6 documentation only:
 7      (1)  In the form as received; and
 8      (2)  Subject to any contractual terms of the publisher that
 9           the publisher provides for end users.
10      (d)  A dealer that enters into agreement with an end user is
11 a licensor of the end user under this chapter.
13         -614  Risk of loss of copy.(a)  Except as otherwise
14 provided in this section, the risk of loss as to a copy,
15 including a copy delivered electronically, passes to the licensee
16 upon its receipt of the copy.
17      (b)  If an agreement requires or authorizes a licensor to
18 send a copy on a physical medium by carrier, the following rules
19 apply:
20      (1)  If the agreement does not require the licensor to
21           deliver the copy at a particular destination, the risk
22           of loss passes to the licensee when the copy is duly
23           delivered to the carrier, even if the shipment is under

Page 102                                                   2373
                                     H.B. NO.           

 1           reservation;
 2      (2)  If the agreement requires the licensor to deliver the
 3           copy at a particular destination and the copy is duly
 4           tendered there in the possession of the carrier, the
 5           risk of loss passes to the licensee when the copy is
 6           tendered at that destination; and
 7      (3)  If a tender of delivery of a copy or a shipping
 8           document fails to conform to the contract, the risk of
 9           loss remains with the licensor until cure or
10           acceptance.
11      (c)  If a copy is held by a third party to be delivered or
12 reproduced without being moved or a copy is to be delivered by
13 making access available to a physical resource containing a
14 tangible copy, the risk of loss passes to the licensee upon:
15      (1)  The licensee's receipt of a negotiable document of
16           title covering the copy;
17      (2)  Acknowledgment by the third party to the licensee of
18           the licensee's right to possession of or access to the
19           copy; or
20      (3)  The licensee's receipt of a record directing the third
21           party, pursuant to an agreement between the licensor
22           and the third party, to make delivery or authorizing
23           the third party to allow access.

Page 103                                                   2373
                                     H.B. NO.           

 1         -615  Excuse by failure of presupposed conditions.(a)
 2 Unless a party has assumed a different obligation, delay in
 3 performance or nonperformance in whole or in part by a party
 4 other than of an obligation to make payments or to conform to
 5 contractual use restrictions, is not a breach of contract if the
 6 delay or nonperformance is of a performance that has been made
 7 impracticable by:
 8      (1)  The occurrence of a contingency whose nonoccurrence was
 9           a basic assumption on which the contract was made; or
10      (2)  Compliance in good faith with any foreign or domestic
11           statute, governmental rule, regulation, or order,
12           whether or not it later proves to be invalid.
13      (b)  A party claiming excuse under subsection (a) shall
14 seasonably notify the other party that there will be delay or
15 nonperformance.
16      (c)  If an excuse affects only a part of a party's capacity
17 to perform an obligation for delivery of copies, the party
18 claiming excuse shall allocate performance among its customers in
19 any manner that is fair and reasonable and notify the other party
20 of the estimated quota to be made available.  In making the
21 allocation, the party claiming excuse may include the
22 requirements of regular customers not then under contract and its
23 own requirements in making the allocation.

Page 104                                                   2373
                                     H.B. NO.           

 1      (d)  A party that receives notice in a record pursuant to
 2 subsection (b) of a material or indefinite delay in delivery of
 3 copies or of an allocation under subsection (c), by notice in a
 4 record, may:
 5      (1)  Terminate and thereby discharge any executory portion
 6           of the contract; or
 7      (2)  Modify the contract by agreeing to take the available
 8           allocation in substitution.
 9      (e)  If, after receipt of notice under subsection (b), a
10 party fails to modify the contract within a reasonable time not
11 exceeding thirty days, the contract lapses with respect to any
12 performance affected.
13                      SUBPART E.  TERMINATION
14         -616  Termination; survival of obligations.(a)  Except
15 as otherwise provided in subsection (b), on termination all
16 obligations that are still executory on both sides are
17 discharged.
18      (b)  In addition to any term that is agreed to survive, the
19 following survive termination:
20      (1)  A right based on previous breach or performance of the
21           contract;
22      (2)  An obligation of confidentiality, nondisclosure, or
23           noncompetition to the extent enforceable under other

Page 105                                                   2373
                                     H.B. NO.           

 1           law;
 2      (3)  A contractual use restriction applicable to any
 3           licensed copy or information received from the other
 4           party, or copies made of it, that are not returned or
 5           returnable to the other party;
 6      (4)  An obligation to return, deliver, or dispose of
 7           information, materials, documentation, copies, records,
 8           or the like to the other party or an obligation to
 9           destroy copies, or the right to obtain information from
10           an escrow agent;
11      (5)  A choice of law or forum;
12      (6)  An obligation to arbitrate or otherwise resolve
13           disputes by alternative dispute resolution procedures;
14      (7)  A term limiting the time for commencing an action or
15           for giving notice;
16      (8)  An indemnity term or a right related to a claim of a
17           type described in section    -805(d)(1);
18      (9)  A limitation of remedy or modification or disclaimer of
19           warranty; and
20     (10)  An obligation to provide an accounting and make any
21           payment due under the accounting.
22         -617  Notice of termination.(a)  Except as otherwise
23 provided in subsection (b), a party may not terminate a contract

Page 106                                                   2373
                                     H.B. NO.           

 1 except on the happening of an agreed event, such as the
 2 expiration of the stated duration, unless the party gives
 3 reasonable notice of termination to the other party.
 4      (b)  An access contract may be terminated without giving
 5 notice.  However, except on the happening of an agreed event,
 6 termination requires giving reasonable notice to the licensee if
 7 the access contract pertains to information owned and provided by
 8 the licensee to the licensor.
 9      (c)  A term dispensing with a notice required under this
10 section is invalid if its operation would be unconscionable.
11 However, a term specifying standards for giving notice is
12 enforceable if the standards are not manifestly unreasonable.
13         -618  Termination; enforcement.(a)  On termination of
14 a license, a party in possession or control of information,
15 copies, or other materials that are the property of the other
16 party or are subject to a contractual obligation to be delivered
17 to that party on termination, shall use commercially reasonable
18 efforts to deliver or hold them for disposal on instructions of
19 that party.  If any materials are jointly owned, the party in
20 possession or control shall make them available to the joint
21 owners.
22      (b)  Termination of a license ends all right under the
23 license for the licensee to use or access the licensed

Page 107                                                   2373
                                     H.B. NO.           

 1 information, informational rights, or copies.  Continued use of
 2 the licensed copies or exercise of terminated rights is a breach
 3 of contract unless authorized by a term that survives
 4 termination.
 5      (c)  Each party may enforce its rights under subsections (a)
 6 and (b) by acting pursuant to section    -605 or by judicial
 7 process, including obtaining an order that the party or an
 8 officer of the court take the following actions with respect to
 9 any licensed information, documentation, copies, or other
10 materials to be delivered:
11      (1)  Deliver or take possession of them;
12      (2)  Without removal, render unusable or eliminate the
13           capability to exercise contractual rights in or use of
14           them;
15      (3)  Destroy or prevent access to them; and
16      (4)  Require that the party or any other person in
17           possession or control of them and make them available
18           to the other party at a place designated by that party
19           which is reasonably convenient to both parties.
20      (d)  In an appropriate case, injunctive relief may be
21 granted to enforce the parties' rights under this section.
22                    PART 7.  BREACH OF CONTRACT
23                        SUBPART A.  GENERAL

Page 108                                                   2373
                                     H.B. NO.           

 1         -701  Breach of contract; material breach.(a)  Whether
 2 a party is in breach of contract is determined by the agreement
 3 or, in the absence of agreement, this chapter.  A breach occurs
 4 in the following circumstances, among others, if a party fails to
 5 perform an obligation in a timely manner, repudiates a contract,
 6 or exceeds a contractual use restriction.  A breach, whether or
 7 not material, entitles the aggrieved party to its remedies.
 8      (b)  A breach of contract is material if:
 9      (1)  The contract so provides;
10      (2)  The breach is a substantial failure to perform an
11           agreed term that is an essential element of the
12           agreement; or
13      (3)  The circumstances, including the language of the
14           agreement, the reasonable expectations of the parties,
15           the standards and practices of the business, trade, or
16           industry, or the character of the breach, indicate
17           that:
18           (A)  The breach caused or is likely to cause
19                substantial harm to the aggrieved party; or
20           (B)  The breach substantially deprived or is likely
21                substantially to deprive the aggrieved party of a
22                significant benefit it reasonably expected under
23                the contract.

Page 109                                                   2373
                                     H.B. NO.           

 1      (c)  The cumulative effect of nonmaterial breaches may be
 2 material.
 3         -702  Waiver of remedy for breach of contract.(a)  A
 4 claim or right arising out of a breach of contract may be
 5 discharged in whole or part without consideration by a waiver
 6 contained in a record to which the party making the waiver agrees
 7 after breach, such as by manifesting assent, or which the
 8 aggrieved party authenticates and delivers to the other party.
 9      (b)  A party that accepts a performance with knowledge that
10 the performance constitutes a breach and fails within a
11 reasonable time after acceptance to notify the other party of the
12 breach waives all remedies for the breach, unless acceptance was
13 made on the reasonable assumption that the breach would be cured
14 and it has not been seasonably cured.  However, a party that,
15 having notified the other party of an explicit reservation of
16 rights, performs, promises performance, or assents to performance
17 in the manner demanded or offered by the other party does not
18 waive the rights reserved.
19      (c)  Except for performance that is to be to the party's
20 satisfaction, a party that refuses a performance and fails to
21 identify in connection with its refusal a particular defect that
22 is ascertainable by reasonable inspection waives the right to
23 rely on that defect to justify refusal only if:

Page 110                                                   2373
                                     H.B. NO.           

 1      (1)  The other party could have cured the defect if it had
 2           been identified seasonably; or
 3      (2)  Between merchants, the other party after refusal made a
 4           request in a record for a full and final statement in a
 5           record of all defects on which the refusing party
 6           proposes to rely.
 7      (d)  Waiver of a remedy for breach of contract in one
 8 performance does not waive any remedy for the same or a similar
 9 breach in future performances unless the party making the waiver
10 expressly so states.
11      (e)  A waiver may not be retracted as to the performance to
12 which the waiver applies.  However, except for a waiver in
13 accordance with subsection (a) or a waiver supported by
14 consideration, a waiver affecting an executory portion of a
15 contract may be retracted by seasonable notice received by the
16 other party that strict performance will be required in the
17 future, unless the retraction would be unjust in view of a
18 material change of position in reliance on the waiver by that
19 party.
20         -703  Cure of breach of contract.(a)  A party in
21 breach of contract may cure the breach at its own expense if:
22      (1)  The time for performance has not expired, the party in
23           breach seasonably notifies the aggrieved party of its

Page 111                                                   2373
                                     H.B. NO.           

 1           intent to cure, and, within the time for performance,
 2           makes a conforming performance;
 3      (2)  The party in breach had reasonable grounds to believe
 4           the performance would be acceptable with or without
 5           money allowance, seasonably notifies the aggrieved
 6           party of its intent to cure, and provides a conforming
 7           performance within a further reasonable time after
 8           performance was due; or
 9      (3)  In cases not governed by paragraph (1) or (2), the
10           party in breach seasonably notifies the aggrieved party
11           of its intention to provide a conforming performance
12           and promptly does so before cancellation by the
13           aggrieved party.
14      (b)  In a license other than a mass-market license, if the
15 agreement required a single delivery of a copy and the party
16 receiving tender of delivery was required to accept a
17 nonconforming copy because the nonconformity was not a material
18 breach of contract, the party in breach shall promptly and in
19 good faith make an effort to cure if:
20      (1)  The party in breach receives seasonable notice of a
21           specified nonconformity and a demand for cure of the
22           nonconforming copy; and
23      (2)  The cost of the effort to cure does not

Page 112                                                   2373
                                     H.B. NO.           

 1           disproportionately exceed the direct damages caused by
 2           the nonconformity to the aggrieved party.
 3      (c)  A party may not cancel a contract or refuse a
 4 performance because of a breach that has been seasonably cured
 5 under subsection (a).  However, notice of intent to cure does not
 6 preclude refusal of the performance or cancellation.
 7                   SUBPART B.  DEFECTIVE COPIES
 8         -704  Copy; refusal of defective tender.(a)  Subject
 9 to subsection (b) and sections    -705 and    -706, if a tender
10 of a copy is a material breach of contract, the party to which
11 tender is made may:
12      (1)  Refuse the tender;
13      (2)  Accept the tender; or
14      (3)  Accept any commercially reasonable units and refuse the
15           rest.
16      (b)  In a mass-market transaction that calls for only a
17 single tender of a copy, a licensee may refuse the tender if the
18 copy or tender fails in any respect to conform to the contract.
19      (c)  Refusal of a tender is ineffective unless it is made
20 before acceptance and within a reasonable time after tender or
21 completion of any permitted effort to cure and the refusing party
22 seasonably notifies the tendering party.
23      (d)  Except as otherwise provided in subsection (b), a party

Page 113                                                   2373
                                     H.B. NO.           

 1 that refuses tender of a copy may cancel the contract only if
 2 there has been a material breach of the whole contract or the
 3 agreement so provides.
 4         -705  Copy; contract with previous vested grant of
 5 rights.  If an agreement grants a right in or permission to use
 6 informational rights which precedes or is otherwise independent
 7 of the delivery of a copy, the following rules apply:
 8      (1)  A party may refuse a tender of a copy which is a
 9           material breach as to that copy, but refusal of that
10           tender does not cancel the contract;
11      (2)  In a case governed by paragraph (1), the tendering
12           party may cure the breach by seasonably providing a
13           conforming copy before the breach becomes material as
14           to the whole contract; and
15      (3)  A breach that is material with respect to a copy allows
16           cancellation of the contract only if the breach cannot
17           be seasonably cured and is a material breach of the
18           whole contract.
19         -706  Copy; duties upon rightful refusal.(a)  After
20 rightful refusal of a copy, if the refusing party rightfully
21 cancels the contract, section    -802 applies, but if the
22 contract is not canceled, the parties remain bound by all
23 contractual obligations.

Page 114                                                   2373
                                     H.B. NO.           

 1      (b)  The following rules apply to a copy that was rightfully
 2 refused or as to which acceptance was rightfully revoked, and to
 3 any copies of it that are in the possession or control of the
 4 refusing party to the extent that the rules are consistent with
 5 section    -802 if that section also applies:
 6      (1)  Any use, sale, or other transfer of the refused copy or
 7           the information it contains, or any failure to comply
 8           with a contractual use restriction, is a breach of
 9           contract unless authorized by this section or by the
10           tendering party.  The licensee shall pay the licensor
11           the reasonable value of the use to the licensee.
12           However, use for a limited time within contractual use
13           restrictions is not a breach and does not constitute
14           acceptance under section    -609(a)(5) if the use:
15           (A)  Occurs after the tendering party is seasonably
16                notified of refusal;
17           (B)  Is not for distribution and is solely part of
18                measures reasonable under the circumstances to
19                avoid or reduce loss; and
20           (C)  Is not contrary to instructions concerning
21                disposition of the copy received from the party in
22                breach;
23      (2)  The refusing party shall:

Page 115                                                   2373
                                     H.B. NO.           

 1           (A)  Deliver all copies, access materials, and
 2                documentation pertaining to the refused copy to
 3                the tendering party or hold them with reasonable
 4                care for a reasonable time for disposal at that
 5                party's instructions; and
 6           (B)  Follow reasonable instructions of the tendering
 7                party for returning or delivering the copies,
 8                access material, and documentation.  Instructions
 9                are not reasonable if the tendering party does not
10                arrange for payment of or reimbursement for
11                reasonable expenses of complying with the
12                instructions;
13      (3)  If the tendering party gives no instructions within a
14           reasonable time after being notified of refusal, the
15           refusing party, in a reasonable manner to reduce or
16           avoid loss, may store the copies, access material, and
17           documentation for the tendering party's account or ship
18           them to the tendering party and is entitled to
19           reimbursement for reasonable costs of storage and
20           shipment;
21      (4)  The refusing party has no contractual obligations other
22           than those stated in this section or the agreement with
23           respect to the copy, access material, and documentation

Page 116                                                   2373
                                     H.B. NO.           

 1           that were refused.  Both parties remain bound by any
 2           contractual use restrictions with respect to copies
 3           that would have been enforceable had the performance
 4           not been refused; and
 5      (5)  In complying with this section, the refusing party
 6           shall act in good faith.  Conduct in good faith under
 7           this section is not acceptance or conversion and may
 8           not be the basis for an action for damages under the
 9           contract.
10         -707  Copy; revocation of acceptance.(a)  A party that
11 has accepted a nonconforming copy may revoke acceptance only if
12 the nonconformity is a material breach of contract and the party
13 accepted the copy:
14      (1)  On the reasonable assumption that the nonconformity
15           would be cured, and it has not been seasonably cured;
16      (2)  During a period of continuing efforts by the party in
17           breach at adjustment and cure, and the breach has not
18           been seasonably cured; or
19      (3)  Without discovery of the nonconformity, if the
20           acceptance was reasonably induced either by the other
21           party's assurances or by the difficulty of discovery
22           before acceptance.
23      (b)  Revocation is not effective until the revoking party

Page 117                                                   2373
                                     H.B. NO.           

 1 notifies the other party of the revocation.
 2      (c)  Revocation is precluded if:
 3      (1)  It does not occur within a reasonable time after the
 4           party attempting to revoke discovers or should have
 5           discovered the ground for it;
 6      (2)  It occurs after a substantial change in condition or
 7           identifiability not caused by defects in the
 8           information, such as after the party commingles the
 9           information in a manner that makes its return
10           impossible; or
11      (3)  The party attempting to revoke received a substantial
12           benefit from the information, which benefit cannot be
13           returned.
14      (d)  A party that rightfully revokes has the same duties and
15 is under the same restrictions as if the party had refused the
16 copy.
18         -708  Right to adequate assurance of performance.(a)
19 A contract imposes an obligation on each party not to impair the
20 other's expectation of receiving due performance.  If reasonable
21 grounds for insecurity arise with respect to the performance of
22 either party, the aggrieved party may:                           
23      (1)  Demand in a record adequate assurance of due

Page 118                                                   2373
                                     H.B. NO.           

 1           performance; and 
 2      (2)  Until that assurance is received, if commercially
 3           reasonable, may suspend any performance, other than
 4           with respect to contractual use restrictions, for which
 5           the agreed return has not been received.
 6      (b)  Between merchants, the reasonableness of grounds for
 7 insecurity and the adequacy of any assurance offered is
 8 determined according to commercial standards.
 9      (c)  Acceptance of any improper delivery or payment does not
10 impair an aggrieved party's right to demand adequate assurance of
11 future performance.
12      (d)  After receipt of a justified demand under subsection
13 (a), failure, within a reasonable time not exceeding thirty days,
14 to provide assurance of due performance which is adequate under
15 the circumstances of the particular case is a repudiation of the
16 contract under section    -709.
17         -709  Anticipatory repudiation.(a)  If either party to
18 a contract repudiates a performance not yet due and the loss of
19 performance will substantially impair the value of the contract
20 to the other party, the aggrieved party may:
21      (1)  Await performance by the repudiating party for a
22           commercially reasonable time or resort to any remedy
23           for breach of contract, even if it has urged the

Page 119                                                   2373
                                     H.B. NO.           

 1           repudiating party to retract the repudiation or has
 2           notified the repudiating party that it would await its
 3           performance; and
 4      (2)  In either case, suspend its own performance or proceed
 5           in accordance with section    -812 or    -813, as
 6           applicable.
 7      (b)  Repudiation includes language that one party will not
 8 or cannot make a performance still due under the contract or
 9 voluntary, affirmative conduct that reasonably appears to the
10 other party to make a future performance impossible.
11         -710  Retraction of anticipatory repudiation.(a)  A
12 repudiating party may retract its repudiation until its next
13 performance is due unless the aggrieved party, after the
14 repudiation, has canceled the contract, materially changed its
15 position, or otherwise indicated that it considers the
16 repudiation final.
17      (b)  A retraction may be by any method that clearly
18 indicates to the aggrieved party that the repudiating party
19 intends to perform the contract.  However, a retraction must
20 contain any assurance justifiably demanded under section    -709.
21      (c)  Retraction restores a repudiating party's rights under
22 the contract with due excuse and allowance to the aggrieved party
23 for any delay caused by the repudiation.

Page 120                                                   2373
                                     H.B. NO.           

 1                         PART 8.  REMEDIES
 2                        SUBPART A.  GENERAL
 3         -801  Remedies in general.(a)  The rights and remedies
 4 provided in this chapter are cumulative, but a party may not
 5 recover more than once for the same loss.
 6      (b)  Except as otherwise provided in sections    -803 and
 7    -804, if a party is in breach of contract, whether or not the
 8 breach is material, the aggrieved party has the rights provided
 9 in the agreement or this chapter, but the aggrieved party shall
10 continue to comply with any contractual use restrictions with
11 respect to information or copies received from the other party
12 which have not been returned or are not returnable to the other
13 party.
14      (c)  Neither rescission nor a claim for rescission of the
15 contract nor refusal or return of the information precludes or is
16 inconsistent with a claim for damages or other remedy.
17         -802  Cancellation.(a)  An aggrieved party may cancel
18 a contract if there is a material breach that has not been cured
19 or waived or the agreement allows cancellation for the breach.
20      (b)  Cancellation is not effective until the canceling party
21 notifies the party in breach of the cancellation, unless a delay
22 required to notify the party would cause or threaten material
23 harm or loss to the aggrieved party.  The notification may be in

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 1 any form reasonable under the circumstances.  However, in an
 2 access contract, a party may cancel rights of access without
 3 notice.
 4      (c)  On cancellation, the following rules apply:
 5      (1)  A party in possession or control of licensed
 6           information, documentation, materials, or copies of
 7           licensed information must take the following actions:
 8           (A)  A party that has rightfully refused a copy must
 9                comply with section    -707(b) as to the refused
10                copy in possession or control of that party;
11           (B)  A party in breach of contract which is in
12                possession or control of licensed information,
13                documentation, or materials or copies of them that
14                would be subject to an obligation to return under
15                section    -618, must deliver all information,
16                documentation, materials, and copies to the other
17                party or hold them with reasonable care for a
18                reasonable time for disposal at that party's
19                instructions.  The party in breach of contract
20                shall follow any reasonable instructions received
21                from the other party; and
22           (C)  Except as otherwise provided in subparagraphs (A)
23                and (B), the party must comply with section

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 1                   -618 as to all information, documentation,
 2                materials, and copies;
 3      (2)  All obligations that are executory on both sides at the
 4           time of cancellation are discharged, but the following
 5           survive:
 6           (A)  Any right based on prior breach or performance;
 7                and
 8           (B)  The rights, duties, and remedies described in
 9                section    -616(b);
10      (3)  Cancellation of a license by the licensor ends any
11           contractual right of the licensee to use the
12           information, informational rights, copies, or other
13           materials;
14      (4)  Cancellation of a license by the licensee ends any
15           contractual right to use the information, informational
16           rights, copies, or other materials, but the licensee
17           may use the information for a limited time after the
18           license has been canceled if the use:
19           (A)  Is within contractual use restrictions;
20           (B)  Is not for distribution and is solely part of
21                measures reasonable under the circumstances to
22                avoid or reduce loss; and
23           (C)  Is not contrary to instructions received from the

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 1                party in breach concerning disposition of them;
 2      (5)  The licensee shall pay the licensor the reasonable
 3           value of any use after cancellation permitted under
 4           paragraph (4); and
 5      (6)  The obligations under this subsection apply to all
 6           information, documentation, materials, and copies
 7           received by the party and any copies made therefrom.
 8      (d)  A term providing that a contract may not be canceled
 9 precludes cancellation but does not limit other rights and
10 remedies.
11      (e)  Unless a contrary intention clearly appears, an
12 expression such as "cancellation," "rescission," or the like may
13 not be construed as a renunciation or discharge of a claim in
14 damages for an antecedent breach.
15         -803  Contractual modification of remedy.(a)  Except
16 as otherwise provided in this section and in section    -804:
17      (1)  An agreement may provide for remedies in addition to or
18           in substitution for those provided in this chapter and
19           may limit or alter the measure of damages recoverable
20           under this chapter or a party's other remedies under
21           this chapter, such as by precluding a party's right to
22           cancel for breach of contract, limiting remedies to
23           return or delivery of copies and repayment of the

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 1           contract fee, or limiting remedies repair or
 2           replacement of the nonconforming copies; and
 3      (2)  Resort to a contractual remedy is optional unless the
 4           remedy is expressly agreed to be exclusive, in which
 5           case it is the sole remedy.
 6      (b)  Subject to subsection (c), if performance of an
 7 exclusive or limited remedy causes the remedy to fail of its
 8 essential purpose, the aggrieved party may pursue other remedies
 9 under this chapter.
10      (c)  Failure or unconscionability of an agreed exclusive or
11 limited remedy makes a term disclaiming or limiting consequential
12 or incidental damages unenforceable unless the agreement
13 expressly makes the disclaimer or limitation independent of the
14 agreed remedy.
15      (d)  Consequential damages and incidental damages may be
16 limited or disclaimed by agreement unless the disclaimer or
17 limitation is unconscionable.  Limitation or disclaimer of
18 consequential damages for injury to the person in a consumer
19 contract for a computer program that is subject to this chapter
20 and is contained in consumer goods is prima facie unconscionable,
21 but limitation or disclaimer of damages for a commercial loss is
22 not.
23         -804  Liquidation of damages.(a)  Damages for breach

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 1 of contract by either party may be liquidated by agreement in an
 2 amount that is reasonable in light of the loss anticipated at the
 3 time of contracting, the actual loss, or the actual or
 4 anticipated difficulties of proving loss in the event of breach.
 5 If a term liquidating damages is unenforceable under this
 6 subsection, the aggrieved party may pursue the remedies provided
 7 in this chapter, except as limited by other terms of the
 8 contract.
 9      (b)  If a party justifiably withholds delivery of copies
10 because of the other party's breach of contract, the party in
11 breach is entitled to restitution for any amount by which the sum
12 of the payments it made for the copies exceeds the amount of the
13 liquidated damages payable to the aggrieved party in accordance
14 with subsection (a).  The right to restitution is subject to
15 offset to the extent that the aggrieved party establishes:
16      (1)  A right to recover damages other than under subsection
17           (a); and
18      (2)  The amount or value of any benefits received by the
19           party in breach, directly or indirectly, by reason of
20           the contract.
21      (c)  A term that does not liquidate damages, but that limits
22 damages available to the aggrieved party, must be evaluated under
23 section    -803.

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 1         -805  Statute of limitations.(a)  An action for breach
 2 of contract must be commenced within the later of four years
 3 after the right of action accrues or one year after the breach
 4 was or should have been discovered, but not later than five years
 5 after the right of action accrues.
 6      (b)  By the original agreement, the parties may reduce the
 7 period of limitations to not less than one year after the right
 8 of action accrues but may not extend it.  However, in a consumer
 9 contract, the period of limitations may not be reduced.
10      (c)  Except as otherwise provided in subsection (d), a right
11 of action accrues when the act or omission constituting a breach
12 of contract occurs, even if the aggrieved party did not know of
13 the breach.  A right of action for breach of warranty accrues
14 when tender of delivery of a copy pursuant to section    -606, or
15 access to the information, occurs.  However, if the warranty
16 expressly extends to future performance of the information or a
17 copy, the right of action accrues when the performance fails to
18 conform to the warranty, but not later than the date the warranty
19 expires.
20      (d)  In the following cases, a right of action accrues on
21 the later of the date the act or omission constituting the breach
22 of contract occurred or the date on which it was or should have
23 been discovered by the aggrieved party, but not earlier than the

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 1 date for delivery of a copy if the claim relates to information
 2 in the copy:
 3      (1)  A breach of warranty against third-party claims for:
 4           (A)  Infringement or misappropriation; or
 5           (B)  Libel, defamation, or the like;
 6      (2)  A breach of contract involving a party's disclosure or
 7           misuse of confidential information; or
 8      (3)  A failure to provide an indemnity or to perform another
 9           obligation to protect or defend against a third-party
10           claim.
11      (e)  If an action commenced within the period of limitation
12 is so terminated as to leave available a remedy by another action
13 for the same breach of contract, the other action may be
14 commenced after expiration of the period of limitation if the
15 action is commenced within six months after termination of the
16 first action, unless the termination resulted from voluntary
17 discontinuance or dismissal for failure or neglect to prosecute.
18      (f)  This section does not alter the law on tolling of the
19 statute of limitations and does not apply to a right of action
20 that accrued before the effective date of this chapter.
21         -806  Remedies for fraud.  Remedies for material
22 misrepresentation or fraud include all remedies available under
23 this chapter for nonfraudulent breach of contract.

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 1                        SUBPART B.  DAMAGES
 2         -807  Measurement of damages in general.(a)  Except as
 3 otherwise provided in the agreement, an aggrieved party may not
 4 recover compensation for that part of a loss which could have
 5 been avoided by taking measures reasonable under the
 6 circumstances to avoid or reduce loss.  The burden of
 7 establishing a failure of the aggrieved party to take measures
 8 reasonable under the circumstances is on the party in breach.
 9      (b)  Neither party may recover:
10      (1)  Consequential damages for losses resulting from the
11           content of published informational content unless the
12           agreement expressly so provides; or
13      (2)  Damages that are speculative.
14      (c)  The remedy for breach of contract for disclosure or
15 misuse of information that is a trade secret or in which the
16 aggrieved party has a right of confidentiality includes as
17 consequential damages compensation for the benefit obtained as a
18 result of the breach.
19      (d)  For purposes of this chapter, market value is
20 determined as of the date of breach of contract and the place for
21 performance.
22      (e)  Damages or expenses that relate to events after the
23 date of judgment must be reduced to their present value as of the

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 1 date of judgment.
 2         -808  Licensor's damages.(a)  In this section,
 3 "substitute transaction" means a transaction by the licensor
 4 which would not have been possible in the absence of the
 5 licensee's breach and which is in the same information or
 6 informational rights with the same contractual use restrictions
 7 as the transaction to which the licensee's breach applies.
 8      (b)  Except as otherwise provided in section    -807, a
 9 breach of contract by a licensee entitles the licensor to recover
10 the following compensation for the losses resulting in the
11 ordinary course from the breach or, if appropriate, as to the
12 whole contract, less expenses saved as a result of the breach to
13 the extent not otherwise accounted for under this section:
14      (1)  Damages measured in any combination of the following
15           ways but not to exceed the contract fee and the market
16           value of other consideration required under the
17           contract for the performance that was the subject of
18           the breach:
19           (A)  The amount of accrued and unpaid contract fees and
20                the market value of other consideration earned but
21                not received for:
22                (i)  Any performance accepted by the licensee; and
23               (ii)  Any performance to which section    -604

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 1                     applies;
 2           (B)  For performances not governed by subparagraph (A),
 3                if the licensee repudiated or wrongfully refused
 4                the performance or the licensor rightfully
 5                canceled and the breach makes possible a
 6                substitute transaction, the amount of loss as
 7                determined by contract fees and the market value
 8                of other consideration required under the contract
 9                for the performance less:
10                (i)  The contract fees and market value of other
11                     consideration received from an actual and
12                     commercially reasonable substitute
13                     transaction entered into by the licensor in
14                     good faith and without unreasonable delay; or
15               (ii)  The market value of a commercially reasonable
16                     hypothetical substitute transaction;
17           (C)  For performances not governed by subparagraph (A),
18                if the breach does not make possible a substitute
19                transaction, lost profit, including reasonable
20                overhead, that the licensor would have realized on
21                acceptance and full payment for performance that
22                was not delivered to the licensee because of the
23                licensee's breach; or

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 1           (D)  Damages calculated in any reasonable manner; and
 2      (2)  Any consequential and incidental damages.
 3         -809  Licensee's damages.(a)  Subject to subsection
 4 (b) and except as otherwise provided in section    -807, a breach
 5 of contract by a licensor entitles the licensee to recover the
 6 following compensation for losses resulting in the ordinary
 7 course from the breach or, if appropriate, as to the whole
 8 contract, less expenses saved as a result of the breach to the
 9 extent not otherwise accounted for under this section:
10      (1)  Damages measured in any combination of the following
11           ways, but not to exceed the market value of the
12           performance that was the subject of the breach plus
13           restitution of any amounts paid for performance not
14           received and not accounted for within the indicated
15           recovery:
16           (A)  With respect to performance that has been accepted
17                and the acceptance not rightfully revoked, the
18                value of the performance required less the value
19                of the performance accepted as of the time and
20                place of acceptance;
21           (B)  With respect to performance that has not been
22                rendered or that was rightfully refused or
23                acceptance of which was rightfully revoked:

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                                     H.B. NO.           

 1                (i)  The amount of any payments made and the value
 2                     of other consideration given to the licensor
 3                     with respect to that performance and not
 4                     previously returned to the licensee;
 5               (ii)  The market value of the performance less the
 6                     contract fee for that performance; or
 7              (iii)  The cost of a commercially reasonable
 8                     substitute transaction less the contract fee
 9                     under the breached contract, if the
10                     substitute transaction was actually entered
11                     into by the licensee in good faith and
12                     without unreasonable delay for substantially
13                     similar information with the same contractual
14                     use restrictions; or
15           (C)  Damages calculated in any reasonable manner; and
16      (2)  Incidental and consequential damages.
17      (b)  The amount of damages must be reduced by any unpaid
18 contract fees for performance by the licensor which has been
19 accepted by the licensee and as to which the acceptance has not
20 been rightfully revoked.
21         -810  Recoupment.(a)  Except as otherwise provided in
22 subsection (b), an aggrieved party, upon notifying the party in
23 breach of contract of its intention to do so, may deduct all or

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 1 any part of the damages resulting from the breach from any
 2 payments still due under the same contract.
 3      (b)  If a breach of contract is not material with reference
 4 to the particular performance, an aggrieved party may exercise
 5 its rights under subsection (a) only if the agreement does not
 6 require further affirmative performance by the other party and
 7 the amount of damages deducted can be readily liquidated under
 8 the agreement.
10         -811  Specific performance.(a)  Specific performance
11 may be ordered:
12      (1)  If the agreement provides for that remedy, other than
13           an obligation for the payment of money;
14      (2)  If the contract was not for personal services and the
15           agreed performance is unique; or
16      (3)  In other proper circumstances.
17      (b)  An order for specific performance may contain any terms
18 and conditions considered just and must provide adequate
19 safeguards consistent with the contract to protect the
20 confidential information, information, and informational rights
21 of both parties.
22         -812  Licensor's right to complete.(a)  On breach of
23 contract by a licensee, the licensor may:

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 1      (1)  Identify to the contract any conforming copy not
 2           already identified if, at the time it learned of the
 3           breach, the copy was in its possession;
 4      (2)  In the exercise of reasonable commercial judgment for
 5           purposes of avoiding loss and effective realization on
 6           effort or investment, complete the information and
 7           identify it to the contract, cease work on it,
 8           relicense or dispose of it, or proceed in any other
 9           commercially reasonable manner; and
10      (3)  Pursue any remedy for breach that has not been waived.
11      (b)  On breach by a licensee, both parties remain bound by
12 all contractual use restrictions.
13         -813  Licensee's right to continue use.  On breach of
14 contract by a licensor, a licensee that has not canceled the
15 contract may continue to use the information and informational
16 rights under the contract.  If the licensee continues to use the
17 information or informational rights, the licensee is bound by all
18 terms of the contract, including contractual use restrictions,
19 obligations not to compete, and obligations to pay contract fees.
20 In addition, the following rules apply:
21      (1)  The licensee may pursue any remedy for breach that has
22           not been waived; and
23      (2)  The licensor's rights remain in effect but are subject

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                                     H.B. NO.           

 1           to the licensee's remedy for breach, including any
 2           right of recoupment or setoff.
 3         -814  Right to discontinue access.  On material breach
 4 of an access contract or if the agreement so provides, a party
 5 may discontinue all contractual rights of access of the party in
 6 breach and direct any person that is assisting the performance of
 7 the contract to discontinue its performance.
 8         -815  Right to possession and to prevent use.(a)  Upon
 9 cancellation of a license, the licensor has the right to:
10      (1)  Possession of all copies of the licensed information in
11           the possession or control of the licensee and any other
12           materials pertaining to that information which by
13           contract were to be returned or delivered by the
14           licensee to the licensor; and
15      (2)  Prevent the continued exercise of contractual and
16           informational rights in the licensed information under
17           the license.
18      (b)  Except as otherwise provided in section    -814, a
19 licensor may exercise its rights under subsection (a) without
20 judicial process only if this can be done:
21      (1)  Without a breach of the peace;
22      (2)  Without a foreseeable risk of personal injury or
23           significant physical damage to information or property

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                                     H.B. NO.           

 1           other than the licensed information; and
 2      (3)  In accordance with section    -816.
 3      (c)  In a judicial proceeding, the court may enjoin a
 4 licensee in breach of contract from continued use of the
 5 information and informational rights and may order that the
 6 licensor or a judicial officer take the steps described in
 7 section    -618.
 8      (d)  A party has a right to an expedited judicial hearing on
 9 a request for prejudgment relief to enforce or protect its rights
10 under this section.
11      (e)  The right to possession under this section is not
12 available to the extent that the information, before breach of
13 the license and in the ordinary course of performance under the
14 license, was so altered or commingled that the information is no
15 longer identifiable or separable.
16      (f)  A licensee that provides information to a licensor
17 subject to contractual use restrictions has the rights and is
18 subject to the limitations of a licensor under this section with
19 respect to the information it provides.
20         -816  Limitations on electronic self-help.(a)  In this
21 section, "electronic self-help" means the use of electronic means
22 to exercise a licensor's rights pursuant to section    -815(b).
23      (b)  On cancellation of a license, electronic self-help is

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                                     H.B. NO.           

 1 not permitted, except as provided in this section.
 2      (c)  A licensee must separately manifest assent to a term
 3 authorizing use of electronic self-help.  The term must:
 4      (1)  Provide for notice of exercise as provided in
 5           subsection (d);
 6      (2)  State the name of the person designated by the licensee
 7           to which notice of exercise must be given and the
 8           manner in which notice must be given and place to which
 9           notice must be sent to that person; and
10      (3)  Provide a simple procedure for the licensee to change
11           the designated person or place.
12      (d)  Before resorting to electronic self-help authorized by
13 a term of the license, the licensor shall give notice in a record
14 to the person designated by the licensee stating:
15      (1)  That the licensor intends to resort to electronic
16           self-help as a remedy on or after fifteen days
17           following receipt by the licensee of the notice;
18      (2)  The nature of the claimed breach which entitles the
19           licensor to resort to self-help; and
20      (3)  The name, title, and address including direct telephone
21           number, facsimile number, or e-mail address with whom
22           the licensee may communicate concerning the claimed
23           breach.

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 1      (e)  A licensee may recover direct and incidental damages
 2 caused by wrongful use of electronic self-help.  The licensee may
 3 also recover consequential damages for wrongful use of electronic
 4 self-help, whether or not such damages are excluded by the terms
 5 of the license, if:
 6      (1)  Within the period specified in subsection (d)(1), the
 7           licensee gives notice to the licensor's designated
 8           person describing in good faith the general nature and
 9           magnitude of damages;
10      (2)  The licensor has reason to know the damages of the type
11           described in subsection (f) may result from the
12           wrongful use of electronic self-help; or
13      (3)  The licensor fails to provide the notice required in
14           subsection (d).
15      (f)  Even if the licensor complies with subsections (c) and
16 (d), electronic self-help may not be used if the licensor has
17 reason to know that its use will result in substantial injury or
18 harm to the public health or safety or grave harm to the public
19 interest substantially affecting third parties not involved in
20 the dispute.
21      (g)  A court of competent jurisdiction of this State shall
22 give prompt consideration to an application for injunctive relief
23 and, temporarily or permanently, may enjoin the licensor from

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                                     H.B. NO.           

 1 exercising electronic self-help even if authorized by a license
 2 term or enjoin the licensee from misappropriation or misuse of
 3 computer information, as may be appropriate, upon consideration
 4 of the following:
 5      (1)  Grave harm of the kinds stated in subsection (f), or
 6           the threat thereof, whether or not the licensor has
 7           reason to know of those circumstances;
 8      (2)  Irreparable harm or threat of irreparable harm to the
 9           licensee or licensor, as the case may be;
10      (3)  That the party seeking the relief is more likely than
11           not to succeed under its claim when it is finally
12           adjudicated;
13      (4)  All the conditions to entitle a person to the relief
14           under the laws of this State have been fulfilled; and
15      (5)  The party that may be adversely affected is adequately
16           protected against loss, or misappropriation or misuse
17           of computer information that it may suffer because the
18           relief is granted under this chapter.
19      (h)  Before breach, rights or obligations under this section
20 may not be waived or varied by an agreement, but the parties, in
21 the term referred to in subsection (c), may specify additional
22 provisions more favorable to the licensee.
23      (i)  This section does not apply if the licensor obtains

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 1 possession of a copy without a breach of the peace and the
 2 electronic self-help is used solely with respect to that copy.
 4         -901  Uniformity of application and construction.  In
 5 applying and construing this chapter consideration must be given
 6 to the need to promote uniformity of the law with respect to its
 7 subject matter among States that enact it.
 8         -902  Severability.  If any provision of this chapter or
 9 its application to any person or circumstances is held invalid,
10 the invalidity does not affect other provisions or applications
11 of this chapter which can be given effect without the invalid
12 provision or application, and to this end the provisions of this
13 chapter are severable.
14         -903  Transactions covered.(a)  This chapter applies
15 to all transactions within its scope that become enforceable on
16 or after its effective date.
17      (b)  Contracts that are enforceable and rights of action
18 that accrue before the effective date of this chapter are
19 governed by the law then in effect unless the parties agree to be
20 governed by this chapter.  However, an agreement to be bound by
21 this chapter does not affect the rights of a third party that is
22 not a party to the agreement."

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                                     H.B. NO.           

 1      SECTION 2.  This Act shall take effect upon its approval.
 3                              INTRODUCED BY:______________________