In the meantime, I have made efforts to discuss the issue with several of the members of the Drafting Committee and believe that another test of the motion is appropriate. In the mass-market context where no forms are used, presumably there will be an effective disclaimer of consequential damages. In a negotiated license setting where the issue of consequential damages is addressed, the parties will either have disclaimed liability for them, or affirmatively dealt with the issue by setting a limit on the amount of consequential damages that could be recovered. SPA is concerned about liability for consequential damages in these two situations because of the potential for extraordinary loss on the part of either party, either for lost profits by the licensee in the case of allegedly defective software, or damage to the licensor for breach of a duty of confidentiality by the licensee. Liability for consequential damages is an issue which we believe, more than most others, has the potential to impact software pricing.
Any party exposed to the possibility of such damages has the ability insure against such loss.
If the licensor is exposed to liability for such damages as against the licensee, the cost of such insurance is likely to show up in higher prices for software to all licensee. We do not believe that it is the place of a Uniform Commercial Code to put licensors in such a position. Quite frankly, in the case of the negotiated agreement between unsophisticated parties, we do not know what can be done short of again reversing the default rule. However, we now know that such a route is politically unnavigable. In the case of the battle of the forms, we believe that a politically acceptable and balanced accommodation could be achieved through a survival mechanism in Section 2B-209.