Arizona Retail Systems v. Software Link

Citation: Arizona Retail Sys., Inc. v. The Software Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993).

Factual Background
Arizona Retail purchased several copies of a computer program from The Software Link. Initially, in response to a telephone call, The Software Link sent Arizona Retail two copies of the software, a demonstration copy and a "live" version. Arizona Retail spent two hours evaluating the demo version of the program, decided it wanted to purchase the live version, and therefore opened the live copy that contained a shrinkwrap license. Subsequently, Arizona Retail purchased additional copies directly by phone (without obtaining or first using the demo copy, and without being specifically told (or reminded) that the software was provided pursuant to a shrinkwrap license

Appellate Court Decision
Even though Arizona Retail was aware of the terms of The Software Link's shrinkwrap license based on its initial purchase, the court refused to enforce the license except on the sale of the initial copy. The court held that in the subsequent transactions contracts were formed at the time the parties agreed by telephone to order and ship the goods, before Arizona Retail in fact received the copies that contained the shrinkwrap licenses.

The court analyzed Arizona Retail's subsequent purchase under U.C.C. § 2-209, as involving proposed modifications to contracts formed at the time each telephone order was placed. Since a proposed modification under U.C.C. § 2-209 is effective only if given express assent by the other party, the court found that Arizona Retail was not bound by the terms of the shrinkwrap license for any purchases after the initial transaction. By contrast, the shrinkwrap license was held enforceable in the first sale because Arizona Retail had had an opportunity to review the agreement before breaking the seal on the "live" version and, by such conduct, agreed to the terms of the shrinkwrap license.