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Volume 1, Issue 3, dated December 31, 2000

• Making difficult decisions easier on your family

• Giving new meaning to 'a surprise in every box'

• Charity Begins at Home

• Making Yahoo pay for the sins of others - the international risks of portals and Internet Service Providers

Making difficult decisions easier on your family

My grandfather suffered a heart attack when I was in high school. I remember it as being difficult day for me. It was, however, nothing like the difficulty that my mother faced. She, like her brothers and sisters, had to make the decision whether or not to pull my grandfather, who had been declared officially brain dead, off of life support. There are six living brothers and sisters who had to agree on a course of action - not an easy feat.

Throw into the mix the presence of doctors, nurses and other relatives and friends, each of whom had an opinion as to what should be done, and you had a very stressful situation. Unfortunately for my family, the one person whose opinion really mattered was not in a position to communicate his wishes, nor had he previously.

What could he have done differently? What should you do?

1. You should consider a Living Will. Not all Living Wills are the same. Some people fear Living Wills because they believe that signing one means signing your life away without regard to religious beliefs, medical conditions, and personal wishes. This is not true. Find a professional who will draft your Living Will to communicate your specific wishes with respect to artificial respiration, antibiotics, withholding of nutrition/hydration, and the like. Your Living Will should reflect the level of care that you are comfortable having, and in what circumstances.

2. You should communicate your wishes to your loved ones. Make sure that those closest to you know what you want to happen with respect to your care should something happen to you. This also includes details such as organ donation; if something is against your religious or personal beliefs, tell someone. Your loved ones can't read your mind, and as unpleasant as it may seem to have this conversation now, remember you can't have when it matters!

3. You should consider a Medicare Power of Attorney. Remember, my grandfather had six children when decisions were to be made about his care. The laws in most states generally defer to the next of kin when decisions about health care are to be made. This means that all children, for example, get an equal voice irrespective of their familiarity with their parent's wishes. This means that the votes of boyfriends, fiancés, life partners and best friends don't get counted. This means that the sibling or family member that you didn't get along with may be making important decisions about your care. Decide on a person that you trust to make important decisions about your care - including which hospital you may be admitted to, whether your organs may be donated, whether you consent to extraordinary measures - and make that person your Medical Power of Attorney. Then, choose an alternate! You can elect to have more than one person make decisions for you; sometimes parents have all of their children, acting together, as the alternate. Consider your own family dynamic before making that decision.

4. Carry Wallet Cards. Some law firms, such as this one, issue wallet cards stating where your Living Will is on file. Additionally, certain medical rights groups will issue DNR (“Do Not Resuscitate”) orders that you may carry in your wallet or purse, as well as organ donor instructions.

Finally, remember that the key word in Living Will is indeed “living”. Choices about your medical care - including who should make those choices in the event that you are not able to - are yours to make during your lifetime. Don't put it off until you can't speak for yourself. Your loved ones are not mind readers. They don't know what you want unless you tell them.

Giving new meaning to 'a surprise in every box'

Traditionally, in the United States, contracts have been viewed as documents to be reviewed, revised, and agreed upon by both parties to a transaction. In law school, they called this a ‘meeting of the minds,’ a term students learn to revile and despise. Nonetheless, the concept was clear - in order to have an enforceable agreement, both parties to the agreement must generally have understood and agreed to it at the time the agreement was made.

This philosophy has one great advantage, in that the parties can agree to pretty much whatever they wish to agree to. It has one major disadvantage, in that a party with more power can impose terms on a less powerful or more desperate. In some countries, a different approach has been taken, and many contract terms are defined by statute, leaving the parties to deal with the consequences, even if those legal requirements do not conform to the agreement the parties would like to reach. Those of you who have dealt with foreign companies will recall the shock and horror of your foreign counterparts when they saw the thirty, forty, or fifty page document which they were asked to sign, a document which might have been only three pages in their home country.

As a result of this approach to contracts, courts in the United States have long been reluctant to enforce boilerplate contracts. That’s right, those long strings of text, usually in tiny gray type on the back of a purchase order, have often been ignored or reconstrued by courts reluctant to impose on one party an agreement quite obviously drafted by the other with no regard for any agreement or the proverbial ‘meeting of the minds.’

Shrinkwrap contracts, those contracts you see stamped on the box of software you just bought or, even worse, on a piece of paper inside, were even less enforceable, from a legal standpoint. After all, many of those contracts could not even be read until after the purchase was made, at which point any payment had already been made. In light of the traditional requirement that the payment (or consideration) be paid at the time the agreement is reached, these shrinkwrap or ‘in-the-box’ contracts were arguably not enforceable. In the interim, these contracts have been given some support in the courts, but not as much as software developers might like. In spite of this, the use of shrinkwrap and similar contracts has grown rather than declined.

Conscious of the somewhat dicey legal footing of their favorite contractual vehicle, software developers have long pushed for more official recognition of shrinkwrap contracts and their offspring, those long, lovely legal texts you are asked to read through when entering a web site or installing your software. The vehicle for this change is UCITA, or the Uniform Computer Information Transactions Act, a model law developed for consideration by the various states in order to clarify this unclear area of the law, among other things.

By recognizing these contracts and the various disclaimers they come with, UCITA is ushering in a change which may be very welcome for software developers but which may be less desirable for software consumers. Anyone who has read those contracts (most of you have not, I suspect, although many of you have purchased software) will note that they tend to disclaim any and all warranties as to the usefulness or serviceability of the software.

On one level, this is understandable, as computer code can be long and complex, and the interaction between it and other computer code unpredictable. Particularly with respect to beta versions, where bugs are to be expected, it is important that warranty claims be disavowed. In essence, UCITA really just provides firm legal foundation for the contracts and agreements which already litter the inside and outside of your computer software packaging, providing a level of confidence in those agreements which is currently not present. It also would validate terms which, under current contract law, would likely not survive if challenged.

On the other hand, by allowing this sort of disclaimer without giving both parties an opportunity to negotiate, UCITA shifts the balance of power in these transactions to the seller, at the expense of the buyer. This may not an important change with two business having equal bargaining power. However, as mass-market software is an increasingly important part of commercial life, many businesses, even large businesses, will find that they make some of their most crucial purchases without influencing the terms under which they take delivery of those products. Even Exxon would be hard pressed to influence the terms of the shrinkwrap agreement which governs the company’s use of Microsoft Word, let alone Windows, no matter how onerous or unfair. Indeed, the companies objecting to the implementation of UCITA include some of the largest in the country.

UCITA also has a number of other controversial provisions. For example, it would allow software publishers to place code in their products which would allow them to disable the software remotely, a practice currently illegal under various anti-hacking statutes and which poses obvious security issues for software users. UCITA would also allow contract terms which would prevent users from providing ‘information’ as to the performance of the software, including such useful information as benchmarks and other comments on software performance. UCITA also makes it much easier for publishers to draft contracts which would enable them to escape damages even for known defects in their software.

UCITA does not exempt software from consumer protection laws, nor does it impose any (or many) limitations on the protection available to consumers of commercial software. It does not alter the intellectual property status of software, or automatically exclude traditional express or implied warranties. What it does, however, is allow the parties to contract away many rights and protections, and places the vendor or publisher in a position to control the terms of the contract. Maryland and Virginia have both passed versions of UCITA and, locally, both New Jersey and Delaware are working on it. Pennsylvania is not considering UCITA as of yet.

Final draft of UCITA
The UCITA page presents many of the arguments against the Act
For arguments in favor of UCITA, see UCITA online

Charity Begins At Home

One of the most common misconceptions in the field of charitable giving is that to make a donation, you must commit to giving large sums of cash up front. While it is true that many charitable organizations make pitches for large cash contributions, many will work with you to structure a sensible charitable giving plan. That is, you can plan to give over periods of time, make gifts in kind, or create your own charitable trust or private foundation. In addition to your “warm fuzzies” for doing good, you may also receive some substantial income tax and estate tax benefits.

Here are some tips for giving:

1. Make gifts in kind. Notwithstanding the recent market woes, that Microsoft or IBM stock that you’ve been holding is likely highly appreciated. You have the option of selling it, paying the capital gains on the appreciation and then making a charitable donation OR donating the appreciated stock. Consider the difference: Say you intend to donate the proceeds of your stock now worth $1000 with a cost basis of $100. In the first instance, you could sell the stock, pay capital gains of $180 on the appreciation (20% of $900) and donate the remainder, now $820 ($1000-$180) to charity. You’ll receive a charitable tax deduction of $820. In the second instance, say you donate the entire $1000 of stock to charity. You pay no capital gains tax and receive a charitable tax deduction for $1000.

   Your gifts don’t have to be shares of stock, either. You can donate cars, computers and even Picassos! One quick warning: Check with your favorite charity before making such a gift. Not all charities accept gifts in kind, and some charities are restricted from accepting some kinds of gifts.

2. Consider a charitable trust. There are two main categories of charitable trusts: charitable lead trusts (CLT) and charitable remainder trusts (CRT).

   A charitable lead trust (CLT) is a trust which distributes a certain amount each year to a charitable organization for a certain term. After the term, the remainder of the trust assets is distributable to a non-charitable beneficiary, such as a family member. The flip side of the CLT is the CRT, or charitable remainder trust. A charitable remainder trust is a trust which distributes a certain amount each year to a non-charitable beneficiary, such as a family member, for a certain term. After the term, the remainder of the trust assets is distributable to a charitable organization.

   There are a number of benefits that can be gained with these type of trusts. One benefit is not paying capital gains tax. You can contribute substantially appreciated assets, such as stocks, art collections, etc., into a charitable trust. These assets can be converted to income or growth producing assets, depending on your trustee’s investment philosophy and your ultimate goals. A second benefit is tax deductions. Even with a CRT, where the assets are promised at a future date to a qualifying charitable organization, you can receive an immediate income and estate/gift tax deduction. Depending on the value of the assets and the term of years, this can result is substantial tax savings.

   A charitable trust can be set up in a relatively short period of time. The trust can be tailored to meet your wishes to provide for your favorite charitable and non-charitable beneficiaries. Administrative costs, often rumored to be high, can be kept minimal, depending on the types of assets and your investment strategies. And no, these trusts do not have to be funded with millions of dollars... They’re also good choices for middle income families.

3. Fund your own private foundation. A private foundation is a vehicle which itself is recognized by the IRS to be tax-exempt. The purpose of a private foundation is to use monies held for a charitable purpose to fund other 501(c)(3) charitable organizations, such as North Light or Hospice.

   A private foundation is run like a company. The main difference is that the “income” from the company must be distributed each year to qualifying charities. Many families who donate large sums of money have their own foundations in order to more efficiently manage their donations - and some families appreciate the idea that their names and charitable purposes will live on indefinitely. Private foundations do need to be funded sufficiently and managed properly to continue in perpetuity. But the pay-off is that “YOUR OWN Private Foundation” can continue to make a difference even after you’re gone. And, of course, there are significant tax benefits as well!

They say charity begins at home... If you’re interested in supporting your favorite charity using one of these methods, contact a professional to see if it’s right for you!

Making Yahoo! pay for the sins of others - the international risks of portals and Internet Service Providers

In the United States, there is a tradition of free speech which is remarkably strong, even given a few slips over the years. Some of our European counterparts have found aspects of this free speech policy somewhat unsettling, even in their highly developed democracies. One of the most controversial areas of free speech is that which deals with the Holocaust and Nazi Germany.

Recently, a number of Jewish organizations sued Yahoo! in France and won, finding that by allowing French users to access Yahoo!'s auction sites selling Nazi memorabilia, the company had violated French law. The French users had apparently accessed the auction site through the company's American portal. Yahoo! claimed that it was technically impossible to identify the national origin of individual Internet users and to exclude users on that basis.

Yahoo! further claimed that any attempt to block access by French surfers was bound to fail. Other critics of the decision claimed that, while the sites in question were objectionable, attempts to regulate Internet use on a per country basis could stifle the growth of an open Internet economy.

This is not the first European courts have struggled with the legacy of World War II and the increased availability of Nazi memorabilia and materials over the Internet. German authorities have been particularly aggressive, inditing a Compuserve executive for trafficking in pornography. German officials have done extensive investigation into AOL's European operations as well.

Internet Service providers and freedom of speech advocates contend that such operations are misplaced, in that they take aim at the company providing access to information rather than the provider of the content. One commentator stated that, as an example, telephone providers are not held responsible for the conversations which take place on their lines, no matter how offensive. In any case, life for ISPs and portals in Europe looks set to become a little more complicated.

Indeed, Germany has passed a law which would make it illegal to post certain Nazi and other hate material anywhere which is accessible to German citizens, according to this Wired article. This type of policy could result in criminal prosecution in one country for something which is not illegal where the action was originally taken. Check out Wired Magazine's article on the Yahoo! case and European treatment of ISP's as well. Some time ago Chris Erb wrote an article on the use of code and remote triggering to disable software, which appeared in The Datalaw Report. For that article, see "Disabling Devices in Software: Permissible or Impermissible Licensor Behavior," The DataLaw Report, November, 1996 or click here. It's old, but still has some useful information.