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Third Party Hardware and Systems Agreements

This chapter covers hardware contracts between organizations that do not manufacture computers. Although Section 6.02 discusses a number of cases in which leases between manufacturers and users are involved, special aspects of lease agreements are considered in Section 5.03. Section 6.02 is based upon a “lease” (FORM 6.02-1) from a third party that has acquired title to the hardware, and is financing the user. Whether such a document is a lease or a security transaction is discussed in Section 6.02[1][b]. The principal provisions of Article 2A that apply to computer leases are discussed in this section. Computer equipment is usually leased for a shorter period than other equipment because of continual technological improvements. Computer leases may be as short as a year or run from two to three years. Leasing computer equipment is often preferred because companies can keep abreast of technological developments without incurring huge capital costs. Section 6.03 is based on a contract (FORM 6.03-1) between a middlemen — OEM, ISO, or VAR so-called — and a user under which the middleman undertakes to deliver a System: hardware and software, customized for the specific user. Section 6.04 discusses the law applicable to sales of hardware at retail. No sample contract form is provided because the usual bill of sale does not differ substantially (if at all) from the standard bill of sale for a household appliance. Section 6.05 discusses contracts for used computers (FORM 6.05-1 is an example) and some of the particular problems encountered in these transactions, especially the problems the buyer may face. For an analysis of U.C.C. Article 9 and bankruptcy issues concerning software and computer systems, see Michael L. Rustad, Chapter 9: Understanding Secured Credit and Bankruptcy Issues in Michael L. Rustad, Software Licensing (Lexis/Nexis IP Law & Strategy Series (2015). This chapter is from Computer Contracts, a five volume treatise by Michael L. Rustad and published by Matthew Bender. This treatise covers the full range of contracts for buying, selling, leasing, and licensing hardware, software and services, with legal analysis, sample clauses and complete contracts. This multi-volume treatise provides a clause-by-clause examination of a wide range of documents, with background material and the full text of the agreement or clause under discussion.