The year 2000 problem is attracting a lot of media attention, but it tends to concentrate on technical problems and the lack of time available to overcome them. Whether the difficulties are surmounted or not, the year 2000 will generate substantial costs for a great many people. Who is liable for these expenses will ultimately be determined in relation to the complex legal relationships in the various transactions which make up the world of computers.
In many ways, the dealer will be most at risk when many of the issues come to be decided. Over the forthcoming months, this column will consider those legal issues. The costs will not only relate to rectifying non-compliant systems, but will often include added business expenses and loss of business profits of a more general kind, arising from both the rectification itself and the failure of a system to perform as required. These too will have to be considered, particularly because such losses may give rise to substantial claims.
From a legal viewpoint, the issues arise mostly under the law of contract.
They will relate to existing contractual agreements, which are sometimes several years old, as well as new ones. The date of the agreement will have an important bearing on the outcome of many disputes - the date by which the supplier of equipment, software or systems sold or installed should have ensured it was compliant will be a crucial factor in many disputes over existing agreements.
Dealers sit at the centre of a web of legal transactions. In addition to customer contracts, they enter into contracts with manufacturers and main dealers - individual transactions and agency agreements. There is also a range of customer agreements, from individual sales to devising or setting up a system, from maintenance to facilities management, from off-the-shelf sales to advice about specific functions.
The failure of any one of these, if non-compliant systems are involved, could be expensive for the customer, and for the dealer if that is where the liability lies. This will not only be the case when the fault is in the equipment sold. It may also occur in setting up a new system which has to work in conjunction with existing hardware or software, or where a system is not itself compliant and the conjunction of old and new gives rise to business transaction failures or failed systems and therefore incurs damages claims. Software and hardware manufacturers will sell only on terms subject to their licence agreements, which gives something else to watch and sets up a three-way legal net. In addition, many manufacturers are not based in the UK, so the question could arise as to which country's law is to be applied. There will be important differences between, say, English law and that of Washington State.
In future columns, we will look at relationships involving the dealer, for example, agency agreements with a manufacturer's main supplier and contracts with small businesses to set up systems or maintenance agreements.
The purpose will be to look at typical types of contractual term, to consider on whom the liability for non-compliant systems is likely to fall, and to what extent. Many contracts will contain warranties of performance or limitation of liability clauses, which could be crucial. It will be helpful for future columns if readers send in examples of the kinds of contract or contractual terms they have come across, although advice cannot be given on specific situations or problems.
But these are not the only issues which arise. Suppose a contract was made some years ago for the supply of a system which it now transpires is not compliant. No damage or loss has yet occurred, but problems are due after 1 January 2000. When can a claim be made - any time after the contract was made or only when the loss has occurred? When the contract was made, should only compliant systems have been sold or should the purchaser have been told it would not work after 31 December 1999?
These and many other such questions may have to be dealt with under the specific terms of the contract or as a result of terms implied by law.
This column cannot hope to deal with all the legal permutations that may arise from the millennium problem, but I hope to consider at least the most important and pressing as well as more general related issues.
- John Melville-Williams QC is a regular contributor to PC Dealer.
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