Information Technology brings extraordinary benefits to society and, because of these benefits, users and purchasers accept standards which would be unacceptable in any other industry.
If cars crashed as often as computers, nobody would drive them. Faulty computer programs have blown up Ariane rockets, closed down airports and disconnected the phones over a large part of the USA. However, the millennium bug threatens to try the patience of users to the limit and it may well finally force users to demand far higher standards of reliability from computer systems.
The relaxed view taken of computer reliability has enabled the industry to grow with extraordinary speed. If computer design had been forced to live up to the standards of liability imposed on Dublin Bus then a computer would probably still weigh the same as a double decker. This growth has meant that computers are now vital for the workings of a whole range of products, services and utilities, most of which are expected to be far more reliable than the PC.
Most modern cars are stuffed with computer chips; one car maker boasts that its top-of-the-range models dispose of more computer power than an Apollo moon-rocket. If one of these chips should fail on January 1st 2000 and refuse to start the car, or worse drive it into a ditch, then irate drivers may not be willing to put it down to experience, reboot and start again. More significantly, car manufacturers may demand compensation from their suppliers; a similar process may also take place across a range of industries such as telecommunications, banking and airlines. Industries such as these, and their insurers, have the financial muscle to drag major software companies through the courts and, if the millennium bug does cost them the huge sums now being suggested, they will have a serious incentive.
Litigation may take any number of permutations; a client who commissioned software with the stipulation that it be compatible with the client's payroll software written back in 1958 may not have a good claim. In contrast a company which simply bought a piece of software "off-the shelf" may feel that it has a legitimate grievance.
Software producers, or rather their lawyers, have become expert at drafting contracts which may avoid such claims. A typical software licence or contract will contain several limitation of liability clauses.
Getting around a clause of this type is difficult and potentially very expensive; in Ireland a litigant could rely on the provisions of the Sale of Goods Acts. If a product was bought by a consumer, legislation such as the Unfair Contract Terms Regulations 1995 could be invoked, or, if the consumer had suffered a physical injury, the Product Liability Act 1991. However, a consumer is unlikely to suffer the sort of losses or injury which would merit this litigation.
A limitation of liability clause in a commercial contract, will only be upheld if it can be shown to be "fair and reasonable". Such a clause was examined by the English Courts in St Albans -vICE. In this case the plaintiff was an English borough council which had to administer the infamous poll tax. The council was under serious time pressure and it approached the defendant company, which offered to sell it a computer system which could be used by its administrators.
One of the functions of the program was that it would analyse the relevant data and produce a figure for the number of people who would have to pay the tax. Due to a programming error the software overestimated the number of people who would have to pay the tax and as a result the council under-estimated the amount which each tax-payer would have to pay. The plaintiff estimated its losses at £1,314,826 but the contract limited damages to £100,000. However, the Courts held that this limitation should not apply due to the serious time constraints which the plaintiff was under - it had not had an opportunity to negotiate the contract properly. Damages of £685,000 were awarded.
While all cases depend on their individual facts, this one at least indicates that, where software is faulty, damages can be recovered.
Any litigation arising from the millennium bug may force software producers and computer companies to produce more reliable products. But such products are being produced anyway; users of UNIX and mainframe systems now anticipate only four hours downtime a year. Such demands for reliability, whether backed up by the courts or not, mark the transition of computers from technological wonder to commonplace commodity.
Denis Kelleher: dkeleher@indigo.ie
Denis Kelleher is a Barrister and is co-author, with Karen Murray BL, of "Information Technology Law in Ireland" published by Butterworths.