The millennium is fast approaching and the consensus is that most people are not prepared for the problems they will inevitably face. Among the problems are many legal issues which, if not properly handled, could cause substantial losses to anyone in business.
In some respects, dealers, particularly those that are not major players in the computer world, could be the most vulnerable to legal complications.
Dealers enter into contractual relationships with users, to whom systems and software are sold, and suppliers, which may be wholesalers or manufacturers.
The purpose of this column is to address the kinds of problems that are likely to arise. Although I cannot address individual cases as such, those which create problems of general interest can be discussed. It will therefore be helpful if readers send in queries to PC Dealer, so I can be sure to address those problems which most concern readers. I will aim to highlight the various situations that may arise which affect dealers.
Anyone purchasing systems or software today could easily assume they are year 2000 compliant. But if that turns out not to be the case, the customer would have a justified complaint against the retailer which sold it to them, for both the failure of the system and even for the consequential loss to business. Similarly, dealers that purchase stock today are justified in expecting it to be year 2000 compliant.
All this sound comforting, but it is only the beginning. First, what if those expectations are not realised? Could claims be made against the dealer or supplier? The answers to such questions depend on the terms and conditions of the dealer's contract with the purchaser and supplier.
It is imperative for a dealer to ensure that contractual arrangements give maximum protection in dealings. This could be achieved by the introduction of carefully drafted warranties in contracts with suppliers, to the effect that any systems or software purchased are compliant. They should also ensure other terms to limit claims by customers.
This is a subject which must be dealt with in depth as any situation may give rise to individual problems. For instance, does the warranty protect the buyer against the replacement cost of equipment as well as against business losses arising from its failure? Is there protection where the loss arises, not from the equipment itself but from its use with other non-compliant systems?
What if the sales representative makes verbal representations during the sale, claiming the product is compliant when it isn't or that, for instance, it is compatible with other systems?
It is all very well to talk about new contracts where an awareness of the problem means you can attempt to deal with it by means of the contractual terms. However, when dealing with big suppliers that have their own agenda with their own contractual terms it will not always be possible to achieve an ideal result.
But what of existing contracts made before awareness of the problem was at its present level? Such contracts will have to be looked at carefully in the context of when they were made, what was the contemporaneous knowledge or expectation about the need for year 2000 compliance, what were the business needs of the purchaser, what was said by each party at the time and so on?
The date after which no non-compliant hardware, operating systems or software should have been sold or produced raises important questions and will affect many claims which may be brought. Indeed, it is in some ways the most critical issue.
There are many other issues which will arise, and if I know anything about legal problems there will always be some which are unexpected. An important question is does your insurance cover you for year 2000 claims?
And what about future insurance - will the insurance companies be restrictive or expensive? How can protection be obtained?
Finally, what about the manufacturers? They are, after all, the ones that should have known about the problem and should have done something about it. Is there any way of placing the responsibility where there is a good case for saying it should lie?
I hope this brief overview gives some idea of the range of questions and problems which could possibly arise. They broadly fall into two categories: how to protect yourself in dealings from now on and what to do about deals already completed. Are there potential liabilities and if so can anything be done about them?
Communication from readers is essential if future columns are to be helpful, so please send any questions to editor Bill Boyle at PC Dealer or email him at [email protected]
John Williams QC is a regular contributor to PC Dealer.
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