PCI Pleased with Mass. Legislators on Internet Bill

January 27, 2004

The Property Casualty Insurers Association of America praised the actions of the Massachusetts Legislature’s Joint Committee on Commerce and Labor for its approval of a bill, HB 1622, that would protect Massachusetts businesses from legal attacks resulting from the application of the Uniform Computer Information Transactions Act (UCITA).

The bill would apply to contracts governing electronic transactions and includes a so-called “bomb shelter” provision to protect Massachusetts’ residents from certain of UCITA’s provisions that allow companies to invoke other state laws by applying the provisions governing electronic commerce.

“UCITA is a highly controversial model bill that was adopted in (1999) by the National Conference of Commissioners on Uniform State Laws (NCCUSL),” said the PCI. “During hearings last year, PCI Senior Vice President John Lobert, in testimony before the Joint Committee, urged the committee to approve HB 1622 to stop software companies from having too much power in negotiating software licenses with Massachusetts businesses.”

“Since two states, Maryland and Virginia, have adopted UCITA, we are concerned that citizens and businesses in Massachusetts could unwittingly be bound by the laws in those states because of the ability to the software manufacturers to name the state whose law will control a software license,” stated PCI VP and New England Regional Manager Frank O’Brien.

“Fortunately, the members of the Joint Committee have seen through this smokescreen and wisely moved to recommend passage of HB 1622 to the full House. We commend Committee Chairmen, Senator Jack Hart and Representative Michael Rodriques, and their committee colleagues for taking a stand on this issue,” he continued. “If passed, the bill will prevent UCITA from being imported into Massachusetts, which has not enacted UCITA. The bomb shelter provides that a contractual choice of law provision in a computer information agreement (i.e., a software license) is voided if it results in the application of UCITA.”

“Last year, NCCUSL decided to stop promoting UCITA after it became clear that organizations that would be negatively impacted by it were strongly opposed to this unnecessary interference with their business. Several other states, including Iowa, North Carolina, Vermont, and West Virginia have enacted UCITA bomb shelter legislation,” the bulletin concluded.

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