Contracts And Licensing
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Librarians deal with contracts in several areas of library administration. There are employment contracts, purchasing contracts (for collections, equipment, and supplies), leasing contracts, and maintenance contracts. In most cases either the municipality (if a public library) or the college or university (if an academic library) has legal staff or lawyers on retainer that oversee the drawing up and negotiation of contracts. These professionals know a great deal about contract law and how it applies in various situations. Most elements of contract law are governed by the Uniform Commercial Code. It was developed over a period of ten years and released in 1952. Revisions have been made to the code, the latest of which was in 1999. It was established in order to codify and make uniform laws dealing with commercial transactions. Prior to its release, each state could conceivably have different laws dealing with sales, negotiable instruments, contracts, and fraud. As interstate commerce became more widely developed the need for a uniform set of laws arose. The UCC was the result. It is divided into nine sections, some of which now have subparts (e.g. section 2). These are

Article Title Contents
1 General Provisions Definitions, rules of interpretation
2 Sales Sales of goods
2A Leases Leases of goods
3 Negotiable Instruments Promissory notes and drafts (commercial paper)
4 Bank Deposits Banks and banking, check collection process
4A Funds Transfers Transfers of money between banks
5 Letters of Credit Transactions involving letters of credit
6 Bulk Transfers and Bulk Sales Auctions and liquidations of assets
7 Warehouse Receipts, Bills Of Lading and Other Documents of Title Storage and bailment of goods
8 Investment Securities Securities and financial assets
9 Secured Transactions Transactions secured by security interests

In 2003, a major revision of Article 2 modernizing many aspects (as well as changes to Article 2A and Article 7) was proposed by the NCCUSL and the ALI. Although being considered, there are no states that have yet adopted the revised version of Article 2.

In 1989, the National Conference of Commissioners on Uniform State Laws recommended that Article 6 of the UCC, dealing with bulk sales, be repealed as obsolete. It remains in force in several jurisdictions.

A major revision of Article 9, dealing primarily with transactions in which personal property is used as security for a loan or extension of credit, was enacted in many states with an effective date of July 1, 2001.[4]

The controversy surrounding with what is now termed the Uniform Computer Information Transactions Act (UCITA) originated in the process of revising Article 2 of the UCC. The provisions of what is now UCITA were originally meant to be "Article 2B" within a revised Article 2 on Sales. As the UCC is the only uniform law that is a joint project of NCCUSL and the ALI, both associations must agree to any revision of the UCC (i.e., the model act; revisions to the law of a particular state only require enactment in that state). The proposed final draft of Article 2B met with controversy within the ALI, and as a consequence the ALI did not grant its assent. The NCCUSL responded by renaming Article 2B and promulgating it as the UCITA. As of October 12, 2004, only Maryland and Virginia have adopted UCITA.

The overriding philosophy of the Uniform Commercial Code is to allow people to make the contracts they want, but to fill in any missing provisions where the agreements they make are silent. The law also seeks to impose uniformity and streamlining of routine transactions like the processing of checks, notes, and other routine commercial paper. The law frequently distinguishes between merchants, who customarily deal in a commodity and are presumed to know well the business they are in, and consumers, who are not.

The UCC also seeks to discourage the use of legal formalities in making business contracts, in order to allow business to move forward without the intervention of lawyers or the preparation of elaborate documents. This last point is perhaps the most questionable part of its underlying philosophy; many[who?] in the legal profession have argued that legal formalities discourage litigation by requiring some kind of ritual that provides a clear dividing line that tells people when they have made a final deal over which they could be sued. (Chart and explanatory material from Wikipedia article on Uniform Commercial Code

Contracts involving labor, both between individuals and employers and between management and labor unions, besides observing the elements of contracts in the UCC, also must adhere to various federal and state labor laws, such as the Fair Labor Standards Act, the Equal Employment Opportunity Act and the Wagner Act. What follows is an brief outline of the more important elements of contract law of which librarians should be aware in making commercial agreements and in creating employment contracts.

Contract Elements

A contract is a promise by both parties of an agreement to render some duty or service or delivery of goods to another. Such a promise or contract is enforceable by law if it meets two fundamental requirements:

  1. There must be agreement between the two parties.
  2. There must be something called consideration.

Consideration is anything of value promised to another when making a contract. So if the library presents a job offer to Mary Doe, the library’s consideration is the employment with pay and other payments and Mary Doe’s consideration is the service she will render as an employee.

Of course even if there is agreement and consideration, the contract may not be enforceable if, for example, either of the parties to the agreement lacks contractual capacity (is drunk, mentally ill, e.g.), or if there was misrepresentation or fraud perpetrated by one of the parties, or if the purpose of the contract is illegal, or if there is the lack of proper formality of the agreement when such formalities are required.

Each contract begins and is completed as part of a process. This process includes

  1. A preliminary negotiation of terms of the contract;
  2. A formal offer by one party to the other (the offeror to the offeree);
  3. Acceptance of the offer by the offeree;
  4. Performance completed and the contract executed; and
  5. Remedy for possible breach of the contract or non-performance of it.

Each contract begins with some oral or informal negotiation of terms for the contract. For a job these negotiations will include a salary, the type of position, the length of time to be hired, the beginning and ending dates of employment, and other elements. For a purchase contract such as a license for electronic resources, the negotiations would include the price of the license, the titles included in the license, the length of time that the library had access to the titles, who may access the titles electronically and other items.

Once the terms have been negotiated a formal offer is made. An offer is a conditional promise made by the offeror to the offeree, giving the offeree the power of acceptance, or the power to create a contract. From this comes the phrase and concept that the offeror is master of the offer which means that the offeree must accept according to the terms of the offer. The offeror can dictate these terms because once the offer is accepted, then the offeror incurs liability and the obligation to meet the terms of the contract.

To be an offer a communication must indicate an intention by the offeror to be contractually bound once the offer is accepted and that the terms of the offer must be reasonably certain or definite.

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