.1 Warranties
Warranties are often the issue in dispute in cases involving computer product contracts. The
most basic warranty provided by a seller of goods is that the "(a) the title conveyed shall be
carry on scholarly and scientific legal work." By restating the law through the efforts of leading legal scholars, the
Institute attempts to address such problems as "lack of agreement among members of the profession on the
fundamental principles of the common law," "lack of precision in the use of legal terms," "conflicting and badly
drawn statutory provisions," "the lack of systematic development of the law," "the great volume of recorded
decisions," and the "numerous variations (of the law) within the different jurisdictions of the United States." http://
www.ali.org/
Similarly, the Uniform Commercial Code (UCC) has been used as the primary basis for achieving
uniformity in commercial transaction law throughout American jurisdictions. General Comment, U.C.C. From a
practical perspective, the UCC in the U.S. is similar in concept, although narrower in the subject matter it covers, to
the generally applicable contract law provisions found in the Codes of civil law countries. For a review of the major
differences between civil and common law jurisdictions in Europe relative to the enforcement of contracts, see
Chance, Clifford, ed., European Computer Law: An Introductory Guide (The Computer Law Association: Current
Issues Publication Series, 1996) Chapter 2.
For contract liability in an international trade context it may be important to consider the provisions of the
"United Nations Convention on Contracts for the International Sale of Goods" and, within the European Union, the
"Council Directive on Unfair Terms in Consumer Contracts." Chance, Chapter 2.
4 "The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with
the contract." §2-301 UCC
5 "The remedies provided by this Act shall be liberally administered to the end that the aggrieved party may be put
in as good a position as if the other party had fully performed but neither consequential or special nor penal damages
may be had except as specifically provided in this Act or by other rule of law." §1-106 UCC
6 State laws typically make leasing of goods subject to Article 2 as well or apply Article 2A which specifically
addresses leasing of goods and is very similar to Article 2.
4
good, and its transfer rightful; and (b) the goods shall be delivered free from any security interest
or other lien or encumbrance of which the buyer at the time of contracting has no knowledge."7
Such a warranty may of course be negated by specific language that the person selling does not
claim title to the product or modified to claim only partial title in the product being sold.8
Because geographic data sets may sometimes be acquired through a string of successive sources
that may each alter the data set, a seller''s ability to sell or license full interests in a geographic
dataset may be an issue in some cases. Additional warranties may be express or implied.
Express warranties by the seller are created by the following:9
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the
goods and becomes part of the basis of the bargain creates an express warranty that the
goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an
express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express
warranty that the whole of the goods shall conform to the sample or model.
"It is not necessary to the creation of an express warranty that the seller use formal words such
as "warrant" or "guarantee" or that he have a specific intention to make a warranty, ..."10
Implied warranties are of two fundamental types, implied warranties of merchantability and
implied warranties of fitness for a particular purpose. Under §2-314 UCC, a warranty that goods
are merchantable "is implied in a contract for their sale if the seller is a merchant with respect to
goods of that kind."11
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and ....
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and
quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promise or affirmations of fact made on the container or label if any.
(3) ... other implied warranties may arise from course of dealing or usage of trade.12
Implied warranties of fitness for a particular purpose are established under the language of §2-
315 UCC. "Where the seller at the time of contracting has reason to know any particular purpose
for which the goods are required and that the buyer is relying on the seller''s skill or judgment to
select or furnish suitable goods, there is unless excluded or modified under the next section an
implied warranty that the goods shall be fit for such purpose."13
Language in the contract tending to negate or limit an express warranty is construed whenever
reasonable as consistent with the express warranty but where consistent construction is
unreasonable the negation or limitation is inoperative.14 Implied warranties of merchantability
and implied warranties of fitness may be waived in the contract.15 Warranties "whether express
or implied shall be construed as consistent with each other and as cumulative ..."16
2.2 Warranties in GIS Cases
2.2.1 Scenario 1 - Let us assume that an individual has purchased off-the-shelf GIS software
from a merchant. The purchaser leaves the store, tries the software, and is disappointed in her
expectations of the capabilities of the software. The product carries with it an implied warranty
of merchantability as well as potential express warranties that might be included, for instance, on
the packaging. Whether the purchaser may receive return of her purchase price will depend on
whether these warranties have been breached. Software, system and data sellers typically are
able to avoid damages for breaching implied warranties of merchantability by meeting the
requirements of §2-314(2) of the UCC listed above and are able to avoid damages for breaching
express warranties by not blatantly overstating or misrepresenting the capabilities of their
products. Thus, in the typical business-like sale of prepackaged software or data it is unlikely
that these warranties have been breached. Of course, further consumer laws in some
jurisdictions or custom in the trade may allow return of undamaged products within specified
time periods with no need for explanation. There is also considerable case law authority
supporting the invalidity of "shrink-wrap license" provisions under U.S. law17 and therefore a
waiver of merchantability contained in a license inside of a software or dataset package probably
would be unenforceable against a consumer.
2.2.2 Scenario 2 - In another instance, let us assume that an individual is engaged in the business
of selling health care products by mail. She reads sales literature about a GIS database and
software system that will allow her to better profile her potential customers and their physical
relationships to a wide range of environmental hazards. Updates of information on the
purchasing patterns of households and environmental hazard ratings are provided on a regular biweekly
basis under the terms of her license with the system supplier. Her signed standard-form
license supplied by the system supplier states that "the software system and data are supplied AS
IS without warranties of any kind, either expressed, implied, or statutory, including but not
limited to warranties of merchantability and fitness for a particular purpose." After suffering
greatly decreased sales through her latest mailing efforts, as evidenced by her worst sales in ten
years, she discovers that a recently introduced non-intentional defect in the latest version of the
GIS software has resulted in her mailings going to the least likely purchasers of her health care
products rather than the most likely purchasers. From her perspective, the software did not do
what the sales literature promised and resulted in very substantial losses to her business.
Unless she lives in a jurisdiction that bans the exclusion of implied warranties, she may have
little chance of prevailing on a contract claim since all warranties were explicitly waived in the
contract. She might argue that the contract as a whole was so one-sided at the time it was made
that it was unconscionable under the circumstances.18 However, let us assume for the sake of
argument that the court finds otherwise, perhaps because the contract was among reasonably
sophisticated business parties of relatively equal bargaining power and the parties freely
negotiated the terms of the contract or had a reasonable opportunity to do so. This raises the
question of whether a tort action based on negligence, misrepresentation, fraud, or strict liability
might be brought in lieu of or in parallel with the contract claim.
Tort liability concepts
A tort is a private or civil wrong or injury to a person or property, which does not arise as the
result of a breach of contract. There are no fixed and rigid classifications for torts. Two major
policies supported by tort law are punishing wrongdoers for their conduct and compensating
injured parties.19 If both policies can be supported by transferring money from the wrongdoer to
pay for the damages of the party harmed, the rationale is strong for granting tort relief. Although
there are no rigid classifications for judge-made tort law, there are some traditionally recognized
or classic tort situations. Three traditional classes of tort liability have been for intentional
harms, negligence, and strict liability. Additional classes of claims that may be relevant to
disputes involving GIS products and services include products liability, defamation, wrongful
invasion of the right of privacy, and misrepresentation. The primarily judge-made law of torts
has been summarized in the U.S. in Restatement of the Law (Second) Torts. Legislation relative
to tort law in individual states has often mirrored the provisions of this document.
3.1 Negligence
Negligence is conduct that breaches a duty of care for the protection of others against
unreasonable risk of harm.20 Each person owes a duty to act as a reasonable person would under
the same or similar circumstances.21 Thus, negligence does not involve intent to cause harm but
only failure to meet a sufficient degree of care. The greater the risk of harm involved, the greater
the care that a reasonable person can be expected to take. Under negligence, the duty to act
reasonably to avoid foreseeable risks of physical injury extends to any person. If this duty is
breached, a plaintiff can recover for personal injury or property damage caused by a product.
However, purely economic loss is not typically recoverable in a negligence action. The duty to
avoid foreseeable risks of solely economic injury runs only to those with whom the product
producer has a special relationship.22
In some situations the defendant is able to present a defense that the plaintiff''s own actions failed
to provide sufficient self-protection. In such cases, a combination of the plaintiff''s and
defendant''s actions may have caused the injury and, if so, liability for damages is distributed
among the parties using the doctrine of comparative negligence or the older doctrine of
contributory negligence.
In most instances, those whose cause of action against a GIS product or service provider is based
solely on economic damages will have a contractual relationship with that provider. For
instance, even under principles that support extension of contract warranties to other reasonably
foreseeable users of the product, those parties without a contractual relationship would typically
be excluded from claiming for economic loss unless they were also injured in person.23 Since
negligence claimants seeking only economic damages would in most cases also have a contract
with the GIS product provider, this raises the issue of whether they might bring a parallel action
in negligence or bring such an action in lieu of a contract claim. Remember that plaintiffs often
desire to pursue tort claims such as negligence because of the possibility for expanded damages
and a broader range of duties imposed on the defendant.
The traditional test in allowing a negligence action in parallel with the contract action for breach
of a duty established by the contract was whether there was misfeasance (improper performance)
as opposed to nonfeasance (failure to perform.)24 In nonfeasance or nonperformance, one may
only resort to contract damages.
Another possibility for maintaining a parallel negligence action would be through a claim of
"professional malpractice." Malpractice occurs when an individual does not perform to the
expected standards of one''s profession. Professional standards of care are higher than those
imposed on the average citizen. Under this approach the plaintiff would argue that a duty
independent of the contractual duty arose in the specific instance. The plaintiff would argue that
a "special relationship" existed between the parties. Proving such a relationship would involve
showing that the plaintiff was relatively unsophisticated, the plaintiff needed to depend on the
defendant''s expertise, the plaintiff did depend on that expertise, and the defendant held itself out
as having the required special expertise. If shown, the plaintiff could maintain both breach of
contract and negligence claims.25

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