Fine Print – Our View

Friday, August 30th, 2013

Over the last week or so we have published extracts of clauses from an IT System Provider’s Terms and Conditions ( the Fine Print). We have done this to raise awareness of their implications to your business and to stimulate debate.

The extracts in question are replicated below:

  1. “Where Hardware is to be supplied XXX shall supply with such Hardware such manuals and documentation relating thereto which are obtained from the supplier of such Hardware; where software is supplied, XXX shall supply such documentation as XXX considers reasonably necessary for the operation by the Customer of such Software excluding Source Code Listings and other similar material and/or information.”
  2.  “Where installation is to be provided XXX shall carry out all the Works and shall make all reasonable endeavours to comply with the Anticipated Completion Date but such date is an estimate only and under no circumstances should XXX be liable for any delay”
  3. “The Customer shall provide such office accommodation, computer equipment, office machinery and general facilities, staff, papers and documents as XXX shall from time to time reasonably require in connection with any aspect of providing the System.”
  4. “In respect of Hardware XXX warrants that it shall be in such condition at the time of delivery as to be acceptable as the subject of the normal maintenance agreement offered by XXX.”

All too often we see examples of companies accepting such clauses without thought to the implications  to their organisations, assuming that they cannot be challenged or altered.  Despite being readily available, professional advice is not always sought.

Consider, clause no 1, and the provision of manuals, firstly for Hardware. If you are not dealing direct with the Manufacturer of the Hardware, which the clause seems to imply, you are reliant on the System Provider doing this for you.  They only commit to providing what has been “obtained” from the Supplier, (Note not Manufacturer). The “Supplier” may not have any documentation to pass on to the System Provider as they may have agreed a lower price with the Manufacturer (which might not necessarily filter down to you) for equipment without full documentation or a slimmed down version with basic information. Depending on your organisation’s technical capability the following is a list (not necessarily exhaustive) of the information you might require.

  • Installation manuals
  • Operating instructions
  • Maintenance instructions
  • User/ Administrator guides
  • Troubleshooting/fault finding guides
  • Repair manuals
  • Illustrated parts lists
  • Technical description

It may also be in the interests of the System Provider to limit the information that they provide in the expectation that you will return to them for assistance when required.

When it comes to Software the clause is even looser. The System Provider is “Judge and Jury” when it comes to deciding what you will have. Again, similar to the Hardware situation there is a level of documentation that is appropriate for your requirements. You should be determining what you require and that should be the starting point of any discussions.

Excluding the Source Code Listing and other similar material and or information may or may not be important to you, particularly if you are dealing with proprietary non-critical packages. In the case of bespoke software, written specifically for you, this is not acceptable.

There is always the argument put forward that the Intellectual Property must be protected and to release details of the source code would be prejudicial to the commercial interests of the developer which has some merit. However, a solution may be to use the services of an Escrow Agent to hold such code with its release to you only being facilitated under specific verifiable circumstances. E.g. default or bankruptcy of the Developer.

Clause no. 2 is akin to the self-fulfilling prophecy – we will be late on delivery! A concept, not unknown in the world of IT (or Construction).

The Clause starts off well as “they shall carry out all the works” (our emphasis). Unfortunately it goes downhill from there. The positive commitment to complete the job is undermined by the phrase “Anticipated Completion Date” which if we didn’t know what Anticipated meant they remind us that it “is an estimate only” and to be sure we get the message they will “under no circumstances…… be responsible for any delay”. To be fair they “shall make all reasonable endeavours” to complete the work by the Anticipated Completion Date but  sadly , the aforementioned caveats negate any value in this gesture.

Clause no 3 again leaves the determination of what is required to the System Provider or what in his opinion is deemed reasonably necessary. Try agreeing what is “reasonable” when the System Provider is 3 months behind schedule and in an attempt to speed up, he doubles his on-site workforce and you have to accommodate, feed, water and provide for their every need.  Define beforehand what you are prepared to provide and then there is no room for manipulation.

Clause no 4. Ever been had? “Well it was OK when we delivered it!” says the System Provider. There is often a gap between delivery and installation and the maintenance agreement may not commence until the system has been commissioned. Read the small print and ensure the System Provider is responsible until you have a fully working system

If you would like any help on this or any other Procurement matter please give me Ray Gambell a call on 01744 20698 or email me at [email protected]