|High-Tech Warranty Project-Comment, P994413
Secretary, Federal Trade Commission
via e-mail: firstname.lastname@example.org
Thank you for this opportunity to comment on warranty protection for software and other computer information products and services. We believe that the market for software and other computer information products should not be regulated at this time by federal law or regulation. State law can deal adequately with any problems that now exist in this market, at least as long as the parties to these transactions can choose by contract which state law applies to their transactions. Moreover, the availability of contractual choice of law eliminates any problems that might otherwise arise from the unmodified adoption of the Uniform Computer Information Transactions Act (UCITA) by some states. The applicable law would depend on myriad consumer choices rather than a single uniform law proposal. Further support for our conclusions is provided the attached article, Uniformity, Choice of Law and Software Sales, which was published in 8 Geo. Mason. U. L. Rev. 261 (1999). Our specific conclusions are as follows:
1. Software and computer information sales and licensing transactions is a rapidly changing area of the law that is heavily influenced by technological developments. Accordingly, it would be inappropriate to prematurely lock in a federal standard before it is clear what the costs and benefits of such a standard would be.
2. Allowing state law to govern these transactions would give states an opportunity to develop alternative approaches to regulation that can change with the times and that can be adapted to various types of transactions.
3. At the same time, enforcing contract terms that choose the applicable state law eliminates any unpredictability that might exist as a result of having multiple state laws. The parties to each transaction would choose at the time of their contract which law applies to their contract. This law may or may not be one based on UCITA.
4. With respect to the need to protect consumers from unfair contract terms, it is important to keep in mind that enforcing contract terms that choose the applicable state law is not subject to the same potential dangers as enforcing other contractual terms. The effect of enforcing a choice-of-law clause is to apply a system of regulation imposed by a state's legislature and courts - not simply to enforce the rules preferred by one of the contracting parties. State lawmakers have incentives to protect their constituents from excessively lax laws.
5. If there is any role for federal law in this area, it is to ensure that consumers have full notice as to which law is being selected in the contract and as to any unusual features of that law. Armed with such notice, consumers could avoid contracts that choose state laws that are excessively friendly to sellers. At the same time, the ultimate decisions as to regulatory options would be left to the individual states rather than being taken over by federal law.
6. If after a period of experimentation a preferred regulatory approach emerges, and if it appears that some consumers are being misled into agreeing to be governed by laws that unfairly favor sellers, then the FTC or Congress might step in to remedy the problem. In the meantime, the potential for such federal action will constrain states from unduly favoring sellers.
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