[*]Visiting Associate Professor of Law, University of Dayton School of Law, and Principal, TechRisk.Law, LaConner, Washington. Professor Clarke has over two decades of experience in litigation and transactional matters - working both in-house and as outside counsel for large, small and medium sized businesses in three jurisdictions.

[1]The terms "form-giver" and "form-taker" have been borrowed from Melvin A. Eisenberg, The Limits of Cognition and the Limits of Contract, 47 Stan. L. Rev. 211, 241 (1995) [hereinafter Eisenberg, Cognition].

[2]Friedrich Kessler, Contacts of Adhesion - Some Thoughts About Freedom of Contract, 43 Colum. L. Rev. 629 (1943). For a review of Llewellyn's views on the issue, see Todd D. Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 Harv. L. Rev. 1173, 1197 ff. (1983).

[3] Unif. Computer Info. Transactions Act, Prefatory Note (2000), The National Conf. Of Commissioners on Unif. State Laws, available at http://www.law.upenn.edu/bll/ulc/ulc_frame.htm (last visited Feb. 4, 2001) [hereinafter Prefatory Note].

[4]Unif. Computer Info. Transactions Act, §§ 112, 113, 208 (2000), The National Conf. of Commissioners on Unif. State Laws, available at http://www.law.upenn.edu/bll/ulc/ulc_frame.htm [hereinafter UCITA]. It has been adopted in Virginia and Maryland and introduced in six others and the District of Columbia. See UCITAnews.com, available at http://ucitanews.com/welcome.htm (last modified Jan. 19, 2001).

[5]Prefatory Note, supra note 3.

[6]The focus of this article is whether and how a legislature can and should allocate product performance risks. Therefore, I will cite few court cases. How a court should decide these cases and allocate product performance risk when no statute exists and the parties have not expressly allocated that risk by bargaining is not the subject of this article. For an extensive discussion of court cases on warranty issues, see, e.g., Raymond T. Nimmer, Images and Contract Law - What Law Applies to Transactions in Information, 36 Hous. L Rev. 1 (1999); Peter A. Alces, W(h)ither Warranty: The B(l)oom of Products Liability Theory in Cases of Deficient Software Design, 87 Calif. L. Rev. 269 (1999); and Joel Wolfson, Express Warranties and Published Information Content Under Article 2B: Does the Shoe Fit?, 16 J. Marshall J. of Computer and Info. L. 337 (1997).

[7]Prefatory Note, supra note 3.

[8]Id.

[9]UCITA was not written by the Conference but by a Drafting Committee consisting of eleven attorneys, plus two ex officio members, advised by five members of the American Bar Association. This Committee also received substantial input from a large number of trade groups, corporations, public interest groups and individuals. See Pratik A. Shah, The Uniform Computer Information Transactions Act, 15 Berkeley Tech. L. J. 85, 86 (2000). The provisions of the Act were also heavily influenced, to put it mildly, by members of the American Law Institute, during its previous life as proposed Article 2B of the Uniform Commercial Code. See Jean Braucher, Why UCITA, Like UCC Article 2B, Is Premature and Unsound, (1999), The 2B Guide, available at http://www.2bguide.com/docs/0499jb.html (last visited Feb. 4, 2001). However, it is the Conference that ultimately approved the Act and submitted it to consideration to the States.

[10]I will use "performance terms" to refer to any contractual provision that (1) sets or avoids a standard for how a product is to perform, the most common being a warranty disclaimer; or (2) provides or avoids a remedy for a failure to comply with a clause described in (1). Performance terms, because they deal with contingencies, are generally not included in "dickered terms" and are among those provisions referred to by other commentators as "contingent" or "invisible" terms. See, e.g., Rakoff, supra note 2, at 1250-55. By "commercial transactions," I mean any transaction that is not a consumer or mass-market transaction as defined in UCITA. In other words, this article addresses transactions where the licensee is either a business entity or an individual who is entering into the transaction for a business purpose.

[11]Prefatory Note, supra note 3.

[12]Rakoff, supra note 2, at 1198-1206; see also Alces, supra note 6, at 296-97.

[13]The notion that bargaining will always produce economically efficient results as long as there are no transaction costs and the other assumptions of modern economics are satisfied is postulated by the Coase Theorem, which is perhaps the scholarly work most often cited in law review articles. See Daniel A. Farber, Parody Lost/Pragmatism Regained: The Ironic History of the Coase Theorem, 83 Va. L. Rev. 397, 399 (1997); see also Stewart Schwab, Coase Defends Coase: Why Lawyers Listen and Economists Do Not, 87 Mich .L. Rev. 1171, 1189 (1989). For an excellent explanation of efficiency concepts, see Michael I. Meyerson, The Efficient Consumer Form Contract: Law and Economics Meets the Real World, 24 Ga. L. Rev. 583, 624 et seq. (1990). For the non-economist, for purposes of this article, it is sufficient to understand that a transaction or other situation is efficient if it maximizes aggregate benefits less aggregate costs. The essential inefficiency of form contracts in the context of performance terms is that, because form-takers do not have and cannot process accurate and complete information, we can have no assurance that they will purchase the same amount of UCITA "computer information" in form transactions that they would in fully-negotiated, true assent transactions. Whenever there is over or under purchasing, we will not have an efficient situation because the parties' whose decisions have been affected by the information disparities and potential transaction costs would alter their purchasing decisions, and thus be better off, if those distortions were not present. As a result, under the simple economic model, the aggregate allocation of resources in the UCITA economy will not be optimal. Economists may rightfully suggest that whether the allocation would be optimal even without those distortions is questionable under the "Theory of the Second Best." See Richard S. Markovits, Symposium on Second-Best Theory and Law and Economics: An Introduction, 73 Chi.-Kent L. Rev. 3 (1998).

[14]UCITA § 112.

[15]Rakoff, supra note 2, 1184-85.

[16]See, e.g., Richard Craswell, Property Rules and Liability Rules in Unconscionability and Related Doctrines, 60 U. Chi. L. Rev. 1 (1993); Melvin A. Eisenberg, The Bargain Principle and Its Limits, 95 Harv. L. Rev. 741 (1982) [hereinafter Eisenberg, Bargain]; Eisenberg, Cognition, supra note 1; Arthur Leff, Contract as Thing¸ 19 Am. U. L. Rev. 131 (1970); Meyerson, supra note 13; Rakoff, supra note 2; W. David Slawson, Standard Form Contracts and Democratic Control of Lawmaking Power, 84 Harv. L. Rev. 529, 532 (1971); Eyal Zamir, The Inverted Hierarchy of Contract Interpretation and Supplementation, 97 Colum. L. Rev. 1710 (1997) (Each article cited here is a fertile source of citations for additional literature on the interpretation and enforcement of form contracts).

[17]Prefatory Note, supra note 3.

[18]See Nimmer, supra note 6, at 3 (noting the value of "images" for the evaluation of legal rules).

[19]The "status quo bias" refers to the tendency of parties to accept conditions consistent with the way things are; so that, for example, parties are more likely to accept a proposed contractual term if it is described as the default rule. See Russell Korobkin, The Status Quo Bias and Contract Default Rules, 83 Cornell L. Rev. 608, 612 (1998).

[20]I use "proprietary" to refer to a product that is materially differentiated from competitive products either through the protection of patent, copyright, trademark or trade secret laws.

[21]Zamir, supra note 16, at 1765-66 and 1771-76 (1997).

[22]Steven P. Croley & Jon D. Hanson, Rescuing the Revolution: The Revived Case for Enterprise Liability, 91 Mich. L. Rev. 683, 695 (1993) (describing these rules as "mutable" rather than "mandatory"). In the terminology of Calabresi, Melamed and Craswell, they would be "liability" rather than "property" rules. Craswell, supra note 16, at 2.

[23]Compare Craswell, supra note 16, at 32 (reaching a similar conclusion regarding incorporation of default rules to replace terms to which a party has not consented); but see UCITA § 112 cmt. 5, illus. 2 (2000) (stating that default rules should replace terms to which the assenting party has not agreed).

[24]We can expect somewhat of the same effect that occurred during the period when the UCC was being considered by the states. Initial opposition to the need for new approaches melted away as intervening judicial decisions made the UCC solutions seem provident. See Towle, The Politics of Licensing Law, 36 Hous. L. Rev. 121, 121-133 (1999). The difference here is that I do not believe that UCITA goes far enough to adapt to new images. Its conservatism regarding form transactions will only exacerbate inefficient results.

[25]See Restatement (Second) of Contracts § 211 (1981).

[26]Id.

[27]Id.

[28]Id.

[29] James J. White, Consumer Protection and the Uniform Commercial Code: Form Contracts Under Revised Article 2, 75 Wash. U.L.Q. 315, 352-53 (1997).

[30]Id.

[31] Id. passim.

[32]Id. at 349-52.

[33]This is not the same as saying that the licensor failed to perform or breached a warranty.

[34]Prefatory Note, supra note 3.

[35]Thus, it is often said that it is impossible to design software of any complexity, especially software that will run with other programs, that does not have bugs. I believe that it is safe to say we do not have that same perception of toasters or of most other goods' images.

[36]As we shall see in Part III, under UCITA this definitional issue matters little in form transactions because, regardless of how the product is defined, the standard disclaimers of performance are enforced and the customer loses. The result is certain, so UCITA's stated objective is achieved, but there is no certainty as far as the user's ex ante evaluation of risk is concerned. UCITA's effect on ex ante certainty, therefore, is one-sided.

[37]UCITA seems to acknowledge that the form-giver is not required to meet a minimum performance obligation. See infra text accompanying note 134. In this regard, Towle agrees that "minimum quality is fundamental to commercial expectations." See Holly Towle, No Good Deed Goes Unpunished (2000), The 2B Guide, available at http://www.2bguide.com/docs/berkht.html (last visited Feb. 4, 2001). Towle does not, however, indicate whether UCITA requires such minimum quality or how it would be defined in the form non-negotiated transaction. Id. Whether competitive forces will impose a minimal performance obligation is discussed infra Part II.A.

[38]The price of the term to the form-taker is the present discounted value of the costs the form-taker would incur over the life of the transaction as a result of the term less the present discounted value of the value of the reduction in price or other consideration, if any, received from the form-giver in exchange for acceptance of the term. See Meyerson, supra note 13, at 590-91.

[39]UCITA § 102(61).

[40]See UCITA § 102 cmt. 53.

[41]UCITA § 102(61).

[42]UCITA § 102 cmt. 53. Official Comment 53's reference to an opportunity to bargain makes it clear that even open disclosure is not enough to take a form out of the definition unless there is really a commercially significant reason to bargain. See Id.

[43]See Nimmer, supra note 6, at 23; White, supra note 29.

[44]See Towle, Politics, supra note 24, at 149.

[45]See Karl Llewellyn, The Common Law Tradition: Deciding Appeals 370-371 (Little, Brown, and Company 1960), analyzed in Rakoff, supra note 2, at 1198-1206, as Llewellyn's "'true answer to the whole problem.'"

[46]See supra note 16.

[47]See Llewellyn, supra note 45, at 370-71, analyzed in Rakoff, supra note 2, at 1198-1206; see also Rakoff, supra note 2, at 1198 n. 91 (noting that Llewellyn wrote about the subject of consent in form transactions at least six times).

[48]See Rakoff, supra note 2, at 1199-1206.

[49]White, supra note 29, at 321 (quoting 47 A.L.I. Proc. 528 (1970), comments of Mr. Willard).

[50]See, e.g., U.C.C. § 2-207; M.A. Mortenson Co. v. Timberline Software Corp., No. 67796-4, 2000 Wash. LEXIS 287 (Wash. May 4, 2000); Eisenberg, Cognition, supra note 1, at 245.

[51]The following synthesis is not intended to reflect the views of any single commentator. The citations are exemplary and not exhaustive. However, in-depth analysis of each of the cited articles would unduly delay getting to my point. The reader with interest in the underlying analysis will profit greatly by reading the articles cited.

[52]See Craswell, supra note 16, at 5; Eisenberg, Bargain, supra note 16, at 742-48; Slawson, supra note 16, at 542-43, 552.

[53]See, e.g., Eisenberg, Bargain, supra note 16, at 742-748.

[54]See, e.g., Anthony T. Kronman & Richard A. Posner, The Economics of Contract Law 4-5 (1979).

[55]See Eisenberg, Bargain, supra note 16, at 764-65.

[56]See Rakoff, supra note 2, at 1181-83.

[57]See id.; see also White, supra note 29, at 324 (recognizing that the duty to read is only a fiction imposed to facilitate commerce, even though White stands as a staunch defender of the duty to read).

[58]See Eisenberg, Bargain, supra note 16, at 765-66; Eisenberg, Cognition, supra note 1, at 244-48.

[59]See Kronman & Posner, supra note 54, 5 (noting that the "objective assent rule" can be justified by the need to prevent people from misleading others from thinking they have a contract); see also Rakoff, supra note 2, at 1220-29. In the form context, there is no basis for such a misleading implication in regard to any specific invisible term.

[60]See Kronman & Posner, supra note 54, at 5.

[61]See Meyerson, supra note 13, at 590-91.

[62]See Rakoff, supra note 2, at 1195; Slawson, supra note 16, at 542-43.

[63]See Slawson, supra note 16, at 556.

[64]See David McGowan, Free Contracting, Fair Competition, and Article 2B: Some Reflections on Federal Competition Policy, Information Transactions, and "Aggressive Neutrality," 13 Berkeley Tech. L.J. 1173, 1214 (1998); Rakoff, supra note 2, at 1228.

[65]To this extent, the "modern" analysis is true to the historical context of the duty to read rule. See, Rakoff, supra note 2, at 1184 et seq. (discussing Lewis v. Great Western Ry., 5 H.&N. 867, 157 Eng. Rep. 1427 (Ex 1860)).

[66]See Eisenberg, Cognition, supra note 1, at 243-44; Zamir, supra note 16, at 1790-91.

[67]Compare Craswell, supra note 16, at 6.

[68]Craswell, supra note 16, at 38-9 (noting that courts have "greater institutional expertise").

[69]See Rakoff, supra note 2, at 1283 n. 335.

[70]See Meyerson, supra note 13, at 585-93 (presenting an excellent introduction to the economic model used by law-and-economics commentators).

[71]See Eisenberg, Cognition, supra note 1, at 240-42.

[72]See id.

[73]See Richard A. Posner, Economic Analysis of the Law § 6.6 (4th ed. 1992). Even if the costs of reading and understanding the legal effect of the terms are minimal (as it would be for "merchant" licensees who both expect and understand the typical warranty disclaimers and remedies limitations), it does not follow that the cost of becoming informed as to the implications of those terms for this product are low. See Croley & Hanson, supra note 22, at 770-71.

[74]See R. Ted Cruz & Jeffrey J. Hinck, Not My Brother's Keeper: The Inability of an Informed Minority to Correct for Imperfect Information, 47 Hastings L. J. 635 (1996), for a discussion of the literature regarding the effect of imperfect information on the bargaining process and on the efficiency of resulting transactions. As Cruz and Hinck demonstrate, those downplaying the effects of imperfect information have greatly over-estimated the impact of the minority of shoppers who care about invisible terms. Id. The image used by those skeptical commentators is at least implicitly one limited to shopping for contractual terms themselves in the context of fairly simple products. Cruz and Hinck's conclusions, therefore, would hold a fortiori for technologically complex products where the purchaser would have even less ability to obtain and understand data regarding performance characteristics, risk of default, and potential consequential damages. Id. In other words, those tending to believe that form-takers would not be harmed by imperfect information could be dealing with one of Nimmer's outdated images.

[75]See Eisenberg, Cognition, supra note 1, at 243-44.

[76]Again, form terms are relevant in a commercial sense only in those few cases where there has been (1) a performance breakdown; and (2) a resort to the legal documentation is necessary to resolve a dispute regarding responsibility and/or amount of loss.

[77]Mark A. Lemley, Intellectual Property and Shrinkwrap Licenses, 68 S. Cal. L. Rev. 1239, 1287 (1995).

[78]See Lon. L. Fuller & William R. Perdue, The Reliance Interest in Contract Damages, 46 Yale. L. J. 52, 56-57 (1936).

[79]See Lemley, supra note 77, 1248, 1263; Shah, supra note 9, at 90-91.

[80]Commentators may inadvertently give the impression that precedent on either side of the issue is both deeper and broader than it actually is. See, e.g., Pamela Samuelson, Intellectual Property and Contract Law for the Information Age: Foreword to a Symposium, 87 Calif. L. Rev. 1, 6 (1999) (stating that "contract cases generally have held"); Carlyle C. Ring, Jr. and Raymond T. Nimmer, Series Of Papers On UCITA Issues, (August 1999), found at http://www.nccusl.org/uniformact_qanda/uniformacts-q-ucita.htm. There are actually very few controlling precedents and hardly a sufficient sample to predict where the law will eventually end up. As in other developing areas of state law, state courts of last resort are notoriously independent of trends. See, e.g., Klocek v. Gateway, Inc., No. 99-2499-KHV, 2000 U.S. Dist. Lexis 9896 (D. Kan. June 16, 2000) (holding that terms of a shrinkwrap delivered after the initial phone order do not become part of the contract). In any event, the precedent issue is really beside the point since it is clear that both species of form contracts are here to stay and that they are drafted as much for in terrorem effect as for enforceability. Any doubts about the latter point can be resolved by asking counsel to provide a formal legal opinion as to the enforceability of a shrinkwrap or clickwrap.

[81]See, generally, Maureen A. O'Rourke, Progressing Toward a Uniform Commercial Code for Electronic Commerce or Racing Toward Nonuniformity, 14 Berkeley Tech. L.J. 635 (1999); Samuelson, supra note 80, at 6; McGowan, supra note 64; Lemley, supra note 77.

[82]See Alces, supra note 6, at 286-87; Nimmer, supra note 6, at 24; Towle, Politics, supra note 24, at 153.

[83]This article does not address form contracts involving the sale of computers governed by UCC Article 2. See, e.g., Westendorf v. Gateway 2000, Inc., No. 16913, 2000 Del. Ch. LEXIS 54 (Del. Ch. Mar. 16, 2000); Klocek, 2000 U.S. Dist. LEXIS 9896.

[84]Lemley, supra note 77, at 1241-42.

[85]See, e.g., M. A. Mortenson Co., 2000 Wash. LEXIS 287.

[86]See In re RealNetworks, Inc., No. 00 C 1366, 2000 U.S. Dist. LEXIS 6584 (N.D. Ill. May 11, 2000).

[87]Eisenberg, Cognition, supra note 1, at 243. For a thorough review of the arguments pro and con on the issue of information costs in the product defect context, including a critique of leading scholarship, see Croley & Hanson, supra note 22, at 769 et seq.

[88]Cf. Croley & Hanson, supra note 22, at 786 et seq. (suggesting that producers would have an incentive to disclose performance risk information to customers without exculpatory incentives if enterprise liability were imposed).

[89]Product repair statistics such as those published by Consumer Reports would be an example of the latter.

[90]See Eisenberg, Cognition, supra note 1, at 244-48. This is especially true for products of any complexity because the form-taker has to investigate and value all potential performance breakdowns before entering into the transaction. At least dealing with the issue ex post, the parties only have to analyze the loss that actually occurred. Cruz and Hinck also conclude that disclosure of information is not likely to create efficient terms: A particularly salient problem with the disclosure argument is that people will generally not know ex ante whether the cost of inefficient terms are large enough to make reading and understanding all of the disclosed terms profitable. Cruz & Hinck, supra note 74, at 661.

[91]For an analysis of efficiency considerations in this area, including the phenomenon of "lemons equilibria," which discourages firms from competing on the basis of performance terms, see Craswell, supra note 16, at 49. See also Croley & Hanson, supra note 22, at 777-792.

[92]See, e.g., Robert W. Gomulkiewicz & Mary L. Williamson, A Brief Defense of Mass Market Software License Agreements, 22 Rutgers Computer & Tech. L.J. 335 (1996). For the contrary view, see Cruz & Hinck, supra note 74, at 639.

[93]See Meyerson, supra note 13, at 585-93.

[94]See McGowan, supra note 64, at 1184.

[95]Towle, No Good Deed, supra note 37.

[96]To an economist, risk is not the same as uncertainty. See Meyerson, supra note 13, at 591 ("'[R]isk is a known probability that an unfavorable outcome will occur"). Technically, neither party may be dealing with risk but only with uncertainty when it comes to performance. In the commercial world, however, the crucial point is that the licensor will have more information about performance issues, so that it is more likely to be able to predict what the economist would call risk.

[97]See Posner, Economic Analysis, supra note 73, at 343-49; Meyerson, supra note 13, at 607-08; but see Craswell, supra note 16, at 39-40.

[98]See Craswell, supra note 16, at 29-31. In this situation, Craswell concludes that courts should impose a "liability" default rule (i.e. it should impose the rules the parties would consent to if they sought an efficient outcome). Id. The statute proposed in Part IV provides such rules.

[99]UCITA §§ 102(4), 113, 112(a), 208. UCITA § 202, "Formation in General" might also be cited here. However for the reasons discussed supra, the better view in the case of partially executed transactions such as those under discussion here is to enforce the dickered terms and limit the debate to the allocation of un-bargained risk.

[100]UCITA § 102(4) (emphasis added).

[101]Id.

[102]UCITA § 102 cmt. 2 (stating that "'Agreement.' This definition derives from Uniform Commercial Code § 1-201(3) (1998 Official Text)").

[103]Zamir, supra note 16, at 1790-91.

[104]UCITA § 113(a).

[105]Id.

[106]UCITA § 113(a)(3). None of these sections restricts the ability of a form-giver to use form terms to modify the relevant UCITA default rules.

[107]UCITA § 112. UCITA § 102(54) defines "record" as information inscribed on a tangible medium or stored in another medium and "retrievable in perceivable form."

[108]UCITA § 112(a).

[109]UCITA § 112(d).

[110]UCITA § 112 cmt. 2.

[111]Id.

[112]UCITA § 112 cmt. 8.

[113]Id. (Citation omitted, emphasis added). See also UCITA § 112 cmt. 5, "Proof of Assent," which sets forth three illustrations of assent situations. Illustration 2 deals with the situation where an on-line stock quote service hides "terms and conditions of service; disclaimers" without drawing the customer's attention to those terms or requiring the customer to "react." Id. The Comment states that in that case there is no assent to the terms. Id. Use of the service would create a contract, and "the court would determine contract terms on other grounds, including the rules of this Act and usage of trade." Id.

[114]UCITA § 112 cmt. 3(b), (d).

[115]UCITA § 112 cmt. 3(b).

[116]Id.

[117]UCITA § 112 cmt. 3(d).

[118]Id.

[119]UCITA § 208. Note the use of "contract" here (the legal obligation of the parties, § 102(17)), rather than "agreement," which is the bargain in fact. Note also that § 208 does not apply to "mass market licenses," which are dealt with in § 209 and which are outside the scope of this Article.

[120]UCITA § 208(3).

[121]UCITA § 207 cmt. 2.

[122]UCITA § 208 cmt. 6, 7 also address the issue and expressly reject the concept of reasonable expectations.

[123]Perhaps, it was because the scholars did not propose a workable substitute.

[124]UCITA § 208 cmt. 2.

[125]Ring & Nimmer, supra note 80.

[126]Id. (emphasis added).

[127]Indeed, that is the "Nordstrom" image that most companies like to adopt in their marketing.

[128]Ring & Nimmer, supra note 80.

[129]Id.

[130]Id. (Footnotes omitted). The authors' approach to authority is particularly telling. Footnote 1 asserts, "There is no question about the enforceability (subject to public policy and unconscionability issues) of standard form licenses where terms are assented to up-front in on-line or other settings." Id. (Emphasis added). However, they cite only one intermediate state court opinion, one federal appellate decision, and two federal trial court decisions. Given the advocacy of the memorandum, reliance on such weak authority - not a single opinion form a state court of last resort on a state law question - is disingenuous at best.

[131]Id. The mass-market license was one of the more hotly debated issues during the UCITA drafting process. See Towle, Politics, supra note 24, at 137-145. The drafting solution is, very generally stated, that shrinkwraps are enforceable, but the licensee can return the product for a refund if she does not like the terms after an opportunity to review. Although the concept is limited to standard form contracts, it is of little interest to the current discussion because (a) it adopts the same general attitude toward enforceability and (b) it was clearly a political compromise.

[132]This would certainly be the case in the Minit-Paid and Geodata hypotheticals.

[133]See Meyerson, supra note 13, at 607-608. Because the perfect access to information and zero transaction cost conditions for the economic model are not satisfied, it does not follow (as it does if the assumptions hold) that a monopolist (including for sake of our analysis, a patent or copyright holder) would collect all monopoly rents through pricing. The costs of performance terms are invisible, so they do not enter into the purchaser's pricing decision, and there is no reason for monopolists to bear risks that can be shifted through the form terms for free. If a monopolist's invisible terms were efficient, Microsoft's Internet Explorer form license agreement would look much different from Netscape's. It doesn't. See Cruz and Hinck, supra note 74, for a discussion of the question whether shopping by a minority of astute, invisible-term-savvy customers can affect this market behavior.

[134]See Nimmer, supra note 6, at 3.

[135]See Karl N. Llewellyn, The First Struggle to Unhorse Sales, 52 Harv. L. Rev. 873, 875 (1939).

[136]Slawson, supra note 16, at 546. Slawson refers specifically to consumers, but his point has broader applicability. Id.

[137]Id.

[138]Id.

[139]Prefatory Note, supra note 3.

[140]I rest to one side the significant and difficult parol evidence issues that can arise in these transactions. For example, UCITA's pro-consumer "mass-market license" provides that express terms of the deal trump terms of the mass-market license. UCITA, however, also makes it clear that an integration clause in the mass-market license can preclude introduction of those express terms. See UCITA §§ 209(2), 301.

[141]See UCITA Part 4. Part 6 of UCITA is titled "Performance." However, those provisions do not define the nature of the performance obligation but merely set forth gap-filling default rules. Thus, the form-giver is free to define performance standards.

[142]See Alces, supra note 6.

[143]UCITA § 109.

[144]UCITA § 109 cmt. 2.

[145]See Id. For example, the form-giver could charge different prices in different jurisdictions to reflect jurisdictional risk or it could compute the potential loss from the application of multiple states' laws and add that to the price over what would be charged if its preferred choice were to be applied. In my experience, either of these approaches would be largely guesswork, like so many aspects of pricing. Imagine asking a lawyer to "price" a choice of law clause in anything but the grossest terms! See infra note 148.

[146]Id.

[147]The Comment's reference to the law of other nations is somewhat unusual since UCITA will be "the law" only in the U.S., unless courts in other countries also enforce choice of law clauses. Id.

[148]Id. As a former purchaser and seller of multiple jurisdiction analyses of licensing and other contracts, I can testify without fear of contradiction that there is a directly inverse relation between the cost of those analyses and their utility. Even a two or three state comparison of a typical 10-20-paragraph agreement, not even taking into account parol evidence and similar issues, will test the limits of cognition.

[149]UCITA § 109 cmt. 2(a) also discusses the fact that the act discards the UCC's requirement that the chosen law must have a reasonable relationship to the transaction: In a global information economy, limitations of that type are inappropriate, especially in cyberspace transactions where physical locations are often irrelevant or not knowable. Parties may appropriately wish to select a neutral forum because neither is familiar with the law of the other's jurisdiction. In such a case, the chosen state's law may have no relationship at all to the transaction. UCITA § 109 cmt. 2(a) (citing White House Report, A Framework for Global Electronic Commerce (July 1, 1997)). This again assumes a negotiated or at least bargained transaction. One could argue that retention of the UCC standard would have been satisfied in those cases for the reasons identified in the comment. But in the form term context, the form-giver should anticipate that the form-taker would presume that any chosen law would have a reasonable relationship. Thus, in our software hypothetical, the Texas licensee would not presume that a Massachusetts licensor would choose English law to apply to a contract.

[150]Thomas S. Ulen, Courts, Legislatures and the General Theory of the Second Best, 73 Chi. -Kent L. Rev. 189 (1998) (maintaining that when we are confident that a market is not in efficient equilibrium and that we cannot make it so with one allocative decision, courts do not have the institutional competence to determine the second or third best solutions); G. Richard Shell, Contracts in the Modern Supreme Court, 81 Cal. L. Rev. 431 (1993) (arguing that the modern Supreme Court's views and applications of efficiency are shallow at best).

[151]UCITA § 110.

[152]UCITA § 110 cmt. 3 (citations omitted). The Comment's use of the following quotation is no more persuasive: The Court's discussion in Carnival Cruise Lines, Inc. v. Shute, 111 S.Ct. 1522 (1991) in a different, but similarly multi -jurisdictional, context is relevant to determining reasonableness in Internet contracting: [It would] be entirely unreasonable to assume that a cruise passenger would or could negotiate the terms of a forum clause in a routine commercial cruise ticket form. Nevertheless, including a reasonable forum clause in such a form well may be permissible for several reasons. Because it is not unlikely that a mishap in a cruise could subject a cruise line to litigation in several different fora, the line has a special interest in limiting such fora. Moreover, a clause establishing [the forum] has the salutary effect of dispelling confusion as to where suits may be brought.... Furthermore, it is likely that passengers purchasing tickets containing a forum clause ... benefit in the form of reduced fares reflecting the savings that the cruise line enjoys.... In electronic commerce, a contractual choice of forum will often be justified on the basis of the risk and uncertainty that would otherwise exist. Choice of a forum at a party's location is ordinarily reasonable. The court's reasoning is specious - it proves nothing but that the clause is in the form-giver's favor, a fact which can be deduced from the presence of the clause in the form contract. Specifically, the court does not indicate what "special interest" a form-giver has other than making profits by shifting losses. Nor is the "salutary" effect of knowing where suit could be brought substantial or salutary to anyone but the form-giver. While pricing effects could make a difference, they are a factual issue courts should not decide without the basis of a record. If the form-giver is to rely on such arguments, it should be put to the proof. But even if there were cost savings, it would seem relevant what the source of those savings were. No one has an interest in requiring inefficient expenditures. But what if the effect of the forum choice is to deprive the claimant of a jury, which no passenger could have foreseen without legal advice? Shouldn't the court measure whether the price reduction is fair in that circumstance?

[153]See Rakoff, supra note 2, at 1181.

[154]The UCITA Drafters' political efforts in this regard are particularly transparent when their Comments adopt the mantle of "friend of small business." One would hope that policy debate ended with the chain store legislation of the 1930s. If a producer's products cause more legally cognizable losses than revenue produced, what public interest is there in keeping the producer afloat? After our experience with television, is there any reason to encourage companies to bring bad ideas to market? Nonetheless, the Comment implies as much in suggesting that litigation in the plaintiff's preferred forum is somehow an unfair advantage to the plaintiff.

[155]UCITA § 803; cf. UCC § 2-719. There are some differences, the most important being the UCITA rule that a failure of a limited remedy to fulfill its essential purpose also knocks out limitations of consequential damages.

[156]UCITA § 803 cmt. 2 (emphasis added). Perhaps the most obvious counter to this assertion is the law's general abhorrence of liquidated damages clauses. See Restatement (Second) of Contracts § 356 (1981).

[157]Id.

[158]The more fundamental question is whether the limitation is just. For example, is a money-back guarantee as an exclusive remedy always just? It may be difficult to identify the public interest that would permit a marketing dynamo to persuade small, technologically unsophisticated firms to run software as a fundamental part of their operations and then limit their remedy to a return of the purchase price when the software does not function.

[159]Ronald H. Coase, The Firm, The Market and The Law 174 (1988). Hence, Coase stressed his fundamental assumption that transaction costs must be minimal for bargaining to achieve efficiency. In fact, he was convinced that a world with zero transactional costs was not "Coasean," but "the world of modern economic theory, one which I was hoping to persuade economists to leave." As a result, Coase concluded that modern economists' policy proposals were "the stuff dreams are made of." Id.

[160]See supra I.D.3.

[161]Ulen, supra note 150.

[162]UCITA § 803 cmt. 5.

[163]For example, in the software hypothetical, HOE might argue that the exclusive remedy of replacing the CD fails its essential purpose because replacement would not cure the compilation problem. However, Comment 5(a) to § 803 states that the court should look only to the performance obligation to judge the purpose of the remedy. See UCITA § 803 cmt. 5(a). Here the form provides no performance obligation, so it is difficult to see how any remedy could fail its purpose of enforcing a non-obligation.

[164]Cf. UCC § 2-204 cmt.

[165]UCITA § 803 cmt. 6 (emphasis added).

[166]UCITA § 105(b).

[167]UCITA § 105 cmt. 3.

[168]Id.

[169]Id.

[170]This is not to say, however, that the Drafters erred in not addressing performance risk in form contracts under a "public policy" rubric. It is sufficient that § 111 of UCITA adopts UCC Article 2's unconscionability doctrine. In effect, unconscionability is merely a subset of the public policy control principle, a subset that focuses on both bargaining deficiencies and unfair results. As is the case with unconscionability, the public policy hammer is too blunt and unwieldy to provide either precision to courts in resolving cases or guidance to parties in resolving performance problems. In other words, resort to unconscionability would be preferable to § 105(b) if the legislature decided that a general judicial veto of negotiated terms was appropriate. However, both courts and commentators have demonstrated that unconscionability is not an effective tool in dealing with performance risks under form contracts. See, e.g., Eisenberg, Bargain, supra note 16, at 800. In focusing unconscionability doctrine on "procedural" aspects such as disclosure and sales tactics and relative bargaining power, courts have made the concept unsuitable for forms-based transactions in which both parties are acting perfectly rationally yet inefficiently. While the doctrine may have been successful in encouraging courts to limit to a single rationale their covert efforts to do justice, neither the rhetoric nor the history of unconscionability makes it a viable candidate for addressing the subject at hand.

[171]See Alces, supra note 6, 292-98; Braucher, supra note 9; O'Rourke, supra note 81.

[172]Shah, supra note 9, at 86-88.

[173]See Karl Llewellyn, Why A Commercial Code?, 22 Tenn. L. Rev. 779 (1953); see also Grant Gilmore, In Memoriam: Karl Llewellyn, 71 Yale L.J. 813, 814-815 (1962); Ingrid M. Hillinger, The Article 2 Merchant Rules: Karl Llewellyn's Attempt to Achieve The Good, The True, The Beautiful in Commercial Law, 73 Geo. L.J. 1141 (1985).

[174]For example, products using Internet technology to share software applications, to store computer files on remote servers, or to access music files from third parties were not common when UCITA was first proposed.

[175]In this regard, it appears that Professor Nimmer's creative use of "images" and his recognition of the significance of paradigm did not convince the Drafting Committee to shuffle off the UCC's judicial coils. See Nimmer, supra note 6. The tendency to rely on judicial precedent is particularly evident in the Official Comments to §§ 109, 110 and 208.

[176]Larger firms that are regular buyers/licensees in UCITA transactions may have their own forms and even small companies may have access to such forms through counsel or the Internet. But the licensee's form terms on performance risk are no more likely to lead to an efficient result than the licensor's because both are wild shots in the Pareto/Kaldor-Hicks dark. For simplicity the remaining discussion will assume that the only form-giver is the licensor. The statute proposed in Part IV is neutral on this issue.

[177]This is the image, not necessarily the universal truth.

[178]That is, one can define ("identify" in UCC Art. 2 parlance) a toaster by pointing to it. But that option is not available for specifying rights to access an information database.

[179]See Towle, Politics, supra note 24; see also, White, supra note 29, at 319-24.

[180]Common examples are forfeiture and liquidated damages clauses and default clauses that permit termination and/or acceleration on non-material breaches. It is interesting that some of the same commentators who make the duty to read/licensor's reliance argument also urge that care should be used in interpreting as "owner's manuals" and other product disclosures rather than as express warranties because buyers just do not rely on such statements. See, Towle, No Good Deed, supra note 37. The statute proposed in Part IV recognizes the general legitimacy of Towle's point, but makes the content of those disclosures a factor to be taken into account in determining the performance standard.

[181]This is a corollary to the Coase Theorem. Because there are substantial transaction costs, original entitlements (the statutory risk allocation) will affect ultimate outcomes.

[182]For a discussion of the relevance of the effects of legislation on reliance interests, see Leo L. Clarke, The Contract Clause: A Basis for Limited Juicial Review of State Economic Regulation, 39 U. Miami L. Rev. 183 (1985).

[183]UCITA § 809(a)(1).

[184]UCITA § 809(a)(1)(C).

[185]Posner recognizes this "out" for presumed intention devotees. See, Posner, Economic analysis of the Law, supra note 73.

[186]See Slawson, supra note 16, at 556.

[187]See Rakoff, supra note 2, at 1176.

[188]See Eisenberg, Bargain, supra note 16, at 741-43; Eisenberg, Cognition, supra note 1, at 212-13.

[189]See, Peter A. Alces & Aaron S. Book, When Y2K Causes 'Economic Loss' to 'Other Property,' 84 Minn. L. Rev. 1, 38-50 (1999).

[190]See id.

[191]"To the extent possible" is intended to refer to the consequential damages risk, which the producer lacks the information to evaluate completely.

[192]This is a Coasean solution. See Farber, supra note 13, at 418-419.

[193]See UCITA § 113.

[194]See UCITA § 105(c).

[195]This is consistent with the notion that price is the most efficient signal of transaction value. Once a form-taker evaluates the statutory bundle of rights (i.e. the default terms), it can roughly price the value of those rights in the typical transaction. As long as the spread between the two safe harbor quotes is greater than the value the form-taker places on the rights, it can make a quick and at least reasonably informed decision. Note that this provision assumes that the legislative default terms are efficient and just, even though I do not agree with UCITA's choices. See supra Part I.B.

[196]Eisenberg, Bargain, supra note 16, at 800 (asserting that the bargain principle requires resolution of two issues, was a bargain made and what is the appropriate remedy).

[197]Nimmer, supra note 6, at 43 n. 165.

[198]See, e.g., Robert W. Gomulkiewicz, The Implied Warranty of Merchantability in Software Contracts: A Warranty No One Dares to Give and How To Change That, 16 J. Marshall J. Computer & Info. L. 393 (1998); Towle, No Good Deed, supra note 37. It should be noted that Gomulkiewicz wrote as an in-house counsel for Microsoft and Towle represents a software association. This does not make them unqualified to speak on the issues - just the opposite in fact. One might consider, however, whether their professional responsibilities to advocate their clients' interests color their positions. Of course, the same can be said about an academic's ideology and/or pride of authorship in his or her ideas. See, Towle, Politics, supra note 24, at 154-161.

[199]Towle, No Good Deed, supra note 37 (citing the fact that the disclaimer is included even in non-form transactions between sophisticated commercial entities, sometimes with warranties substituting for unacceptably ambiguous implied warranty rights).

[200]See id.; Croley & Hanson, supra note 22, at 719 (commenting that "[i]t seems difficult to imagine that Firestone is exploiting General Motors [when Firestone disclaims implied warranties]"). But large volume component buyers and sophisticated commercial consumers can have the ability to manage risk more cheaply than the producer. These claims would be more credible if form-givers generally substituted more substantive express warranties. Typically, however, the only express warranty, besides minimal system specifications, is one of quality workmanship and materials.

[201]See UCC § 2-314; UCITA § 403.

[202]Similarly, a pure ex post determination, akin to an "I know it when I see it" standard a la Potter Stewart (Jacobellis v. Ohio, 378 U.S. 184, 197 (1964)) is probably too uncertain to permit optimal product design and pricing.

[203]Croley & Hanson, supra note 22, at 786.

[204]In an uncontrolled and intuitive test of this phenomenon, I have quizzed various continuing education audiences regarding the following facts taken from American Guarantee & Liab. Ins. Co. v. Ingram Micro, Inc., No. 99-185 TUC ACM, 2000 U.S. Dist. LEXIS 7299, *3-5 (S.D. Ariz. Apr. 18, 2000). A power outage caused a network to crash. Even after power was restored, it took hours to restore the network to full operating condition. Ingram employees finally returned the network to operation by bypassing a malfunctioning matrix switch. In the days following the power outage, Ingram determined that when the power outage occurred, the custom matrix configurations that existed prior to the outage were different than the default settings after the outage because the programming information had disappeared from the random access memory. The matrix switch therefore had to be reprogrammed with the necessary custom configurations before network communications could be restored. I asked different audiences (average size 50) whether the matrix software was defective, adding in one case that the reprogramming took 8 hours and the revenue loss was $30 million and in the other that it took 20 minutes and the loss was only $30,000. Knowing only the facts above, the vast majority of respondents conclude that there was a defect in the former case but not in the latter.

[205]The following discussion tends to assume that the licensor is the form-giver. This is the most common, but by no means only, situation currently. Towle correctly points out that technology will permit users to employ standard forms at very little cost. See Towle, No Good Deed, supra note 37. One could argue that there is a difference between licensor and licensee forms in that the licensee form-giver will still not have an informational advantage regarding the product itself. However, the transactional cost asymmetry involved in pricing the form terms would probably still preclude contractual assent by the licensor. For this reason the model statute sets mandatory terms that apply regardless of the role of the form-giver.

[206]Of course, counsel to the licensor would be apoplectic if she heard this conversation.

[207]In this regard, it might be questioned what factors turn the more routine form transaction into a fully negotiated transaction. One situation, cited by Towle, is the case of the "large licensee" who can command express and even unique warranty obligations. See Towle, No Good Deed, supra note 37. Towle does not address, since it is not central to her point, why this would be the case. One explanation could go as follows: The licensee's bargaining power may result from either a volume purchase or from its marquee value as a customer. In either case, it would seem that the licensor's willingness to negotiate rather than insist on the form terms may result just as much from lower per unit distribution costs (which would subsidize the higher warranty costs) as it does from any "superior bargaining power" of the licensee. This explanation is consistent with the view that the use of forms originates with the efficiency gains to, and institutional imperatives of, the licensor. See Rakoff, supra note 2, at 1222-24. On the other hand, it might be that the licensee is able to negotiate better warranty terms because it has already acquired sufficient expertise (either from previous transactions with similar products or through retention of new internal or external advisers) such that its transaction costs of pricing and negotiating the contingent terms are not typical of other licensees. The facts in the latter circumstance might justify a different performance obligation or remedy from the former transaction, which is more similar in terms of efficiency effects to the pure form transaction.

[208]Ian Ayres and Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87, 93 (1989); Craswell, supra note 16, at 11. By fully negotiated, I mean a transaction in which parties with equal knowledge and sophistication bargain in a pie-maximizing (cooperative) rather than a pie-dividing (competitive) manner. See, e.g., Roger Fisher and William Ury, Getting to Yes Negotiating Agreement Without Giving In (1981). This does not mean that a form-giver must demonstrate a particular bargaining mode in order to prove that the transaction should not be regulated as a form transaction. Outrageously competitive or embarrassingly weak cooperative bargaining can still be sufficient to provide the basis for determinative reliance by the form-giver on the form-taker's apparent knowing assent.

[209]See, e.g., Meyerson, supra note 13, at 617-18 (providing a similar insight into the theory of a least cost avoider).

[210]Posner, Economic Analysis of Law, supra note 68, § 6.6.

[211]The warranty provisions in Part 4 can be viewed in this light as can §§ 809(a)(2) and 102(13), the gap-filling terms governing consequential damages.

[212]UCITA §§ 113, 208.

[213]See supra text accompanying note 204.

[214]Posner, Economic Analysis of Law , supra note 73, at 7-8.

[215]See Eisenberg, Cognition, supra note 1, at 222-24 (discussing several empirical studies).

[216]See supra Part IV.A.3.

[217]Neither the analysis here nor the model statute inquires whether the developer knew or should have known about the possibility of cutting and pasting; negligence is not the standard used at this stage.

[218]This would take into account, for example, both the perceived prevalence of the licensee's cutting and pasting practice among the likely customer base and whether the spreadsheet program used by this licensee had particular attributes that made the practice unusually difficult to design around.

[219]For example, a $5,000 license fee for a software program that controls the outlet valves at a wastewater treatment plant.

[220]The "collateral source rule," generally holds that a tortfeasor is not allowed to take advantage of the insurance benefits received by the plaintiff. That rule may be generally consistent with economic analysis because it provides an incentive for producers to cause price to reflect risk. See Posner, Economic Analysis of Law, supra note 73, at 201. However, it is inconsistent with commercial practice for the following reasons. First, in the absence of the perfect information required by the economic model, it is unlikely that the producer will have the necessary information to set price roughly equivalent to risk. Second, it masks the fact that the party with insurance is generally the best risk bearer. Third, pursuing litigation where the loss has been paid by insurance unreasonably increases transaction costs whether the litigation is direct or a subrogation action by the insurer. Whether subrogation and contribution actions by insurers should be permitted is an interesting question outside the scope of this article.

[221]See, Leo L. Clarke et al., E-Risk Coverage Guide 13-25 (2000).

[222]Id. at 27-38.

[223]Id.

[224]An exception would be performance defects that cause defamation, invasion of privacy and certain copyright infringements that would be covered under "advertising injury" or "personal injury" coverages. Id. at 38-43.

[225]Id. at 227-230.

[226]See, e.g., the discussion of choice of forum and law clauses, supra Parts II.C.1 and II.C.2.

[227]By "commercially unreasonable," I refer to claims that can - and therefore should - be resolved at substantially less cost through business solutions rather than legal proceedings. The business solution can be provided by the licensor or the licensee. The idea is to discourage the use of legal proceedings as leverage.

[228]Transactors can avoid the force of the rules only by an explicit opt-out in a fully negotiated context. See supra Part IV.A.1.

[229]For example, enforcement of a repair and replace remedy limitation will require evidence of a commercially acceptable repair and replace service.

[230]For example, a number of leading technology companies have announced an initiative to create a consumer complaint tribunal that will avoid the current problems of customer unfriendly arbitration rules etc.

[231]UCITA §§ 402, 619(b). The "Official Comments" do not restate arguments presented earlier in the article except where necessary to explain statutory language.

[232]Numerous sections of UCITA would need to be amended to refer to the proposed revision. As a manifestation of bounded rationality, I have not attempted to catalog or analyze the implications of those amendments.

[233]I assume, for purposes of simplicity, that there are no express warranty claims. If there were, HOE could pursue those under UCITA §§ 402 and 619(b).

[234]A different situation would be presented if the software only performed the billing function and did not include a separate time-keeping function. In that event, the underlying assumption - what works for one part of the program (time keeping) should also work for the related part - would not follow. So, the software might be fit for the ordinary purpose of creating bills (only) because the quality of data input is external to the program.

[235]Resolution of these issues will probably turn on the testimony of expert witnesses, as is the case with most product liability claims. This will mean that most performance claims cannot be disposed of on summary judgment, a fact that White criticizes as inefficient and unfair. White, supra note 29, at 350. I find White's criticism (of the reasonable expectations doctrine) in this regard to be unpersuasive since it seems to flow in part from an unflattering opinion of consumer counsel. Id. at 341 n. 151. That concern would be better addressed specifically rather than generally. Moreover, the present issue is distinguishable from White's reasonable expectations argument since the technical aspects of UCITA transactions, as opposed to the meaning of express terms of a contract, are unlikely to be within the common experience of judges. In any event, White's objection could be met by making the determination of the § 619(c) performance standard a question of law for the court and therefore determinable on summary judgment. The rationale could be that the question involves the same gate-keeping function as determination of standard of care in a negligence action or integration under the parol evidence rule.

[236]By this point the reader might suggest that the statute could be reduced to the essence of "Thou shalt be commercially reasonable in form transactions." Based on my Judeo-Christian heritage, I would accept that resolution, but it appears politically unrealistic given the mere existence of a complex statute like UCITA.

[237]This objective is now accomplished to some extent through form limitations on remedies and choice of forum clauses.

[238]In fact, Korobkin suggests that "tailored default rules" like those of the statute increase resolution costs compared to untailored or majoritarian rules because they require the courts to investigate what the particular parties would have agreed to if they had focused on the contingency that created the dispute. Korobkin, supra note 19, at 670 et seq.

[239]Id.

[240]Id. at 672-73.

[241]UCITA §§ 102(35), 102(37), 102(52). The maps and data will be "published informational content" if they were "made available to recipients generally . . . in substantially the same form." Whether the product delivered to Spacechain is "published informational content" will depend to a certain extent on what "made available" means. It is perhaps unlikely that other Geodata customers will request the same congeries of maps as Spacechain, but the fact that others could do so should mean that Geodata makes them "available . . .generally" See UCITA § 102 cmt. 46.

[242]UCITA §§ 301, 406. Interestingly, UCITA creates no implied warranty of any type with respect to published informational content. And even if the maps and data were not published informational content, the implied warranty for informational content is limited to "no inaccuracy . . . caused by [Geodata's] failure to perform with reasonable care." The policy underpinnings for these drastic provisions are freedom of information flow concerns, which are hardly persuasive, but that is a topic for another day.

[243]UCITA § 803(a)(1). Under § 803(b), the exclusive remedy would not be enforced if it "failed of its essential purpose." UCITA § 803(b). The Official Comment to § 803 makes it clear, however, that the exception is to be narrowly construed. UCITA § 803 cmt. 5.

[244]UCITA § 803(d).

[245]It was not necessary to reach the express warranty issue under UCITA because the limitation of remedy made it commercially insignificant.

[246]UCITA § 402 cmt. 8. The thrust is that the "basis of the bargain" rule used in UCC Article 2 does not apply. UCC §§ 2-313, 2A-210.

[247]A reasonable construction of "reliable" in this case is that the user can rely on what Geodata purports to be Michigan information to the same extent as if the user accessed Michigan's databases directly. Certainly, the reasonable user could not assume that Geodata was warranting the reliability of the content of hundreds of databases managed by third parties.

[248]Sections 619(c)(1)(i) and 619(c)(1)(iii) do not seem relevant here.

[249]Geodata might argue that Spacechain's use is not "ordinary" but particular and that the Model Statute does not imply a warranty of fitness for a particular purpose. The resolution of that issue will turn on whether a significant number of users of such information rely on it for similar purposes. Geodata's own marketing efforts and distribution channels will be relevant in this regard.

[250]This section assumes that the reader has a working knowledge of the Year 2000 issue. For an explanation of the problem and its roots, see Alces & Book, supra note 189.

[251]See Year 2000 Litigation and Arbitration that have been filed, available at http://www.thefederation.org/public/Y2K/lawsuits.htm(last visited Feb. 5, 2001).

[252]See Alces & Book, supra note 189.

[253]This is not to suggest that the external costs of performance risk in UCITA transactions are as large or as important to future generations as our environmental problems. One's inability to check email ten times per hour is unlikely to have the same impact as discharges of mercury into drinking water. I use the narrow timeframe above to reflect the fact that during that period American government and industry were aware of the environmental hazards, but preferred to encourage innovation and economic growth. The approach of the Conference and its supporters seems comparable.

[254]See, e.g., Posner, Economic Analysis of Law, supra note 73, at § 8.2