Balancing The Risks In Computer Contracts

Computer acquisitions have become more common for both large and small firms. Historically, most hardware-software acquisitions have been governed by Article 2 of the Uniform Commercial Code (UCC). As the industry has evolved, there has been a search for new causes of action that are more appropriate for the computer industry. In one case, the court held that, where the sale of goods predominates over that of services, the entire transaction will be governed by the UCC. The courts have not conclusively identified the boundaries of the UCC's applicability to computer transactions. The express warranty is a powerful bargaining point in computer contract development. It is common for computer contracts to exclude implied warranties. The nullification of contractual limitation of warranties does not automatically remove restrictions on the award of consequential damages. Limitations imposed by contractual causes can be overcome where fraud is established.