The Vital Signs

Legal aspects of the millennium bug

The millennium bug is a fault in the ability of software to handle dates, which will lead to incorrect calculations with the arrival of the year 2000. But, according to leading legal firm Tarlo Lyons, UK companies should act now to pre-empt 2000 problems. Here are some of the potential liabilities you should be aware of:

l The Latent Damage Act could kick-start users into claiming compensation from suppliers for breach of contract if their systems are not year 2000-compliant as early as this year. John Mawhood, a partner at Tarlo Lyons, says: ?People think that if their systems are more than six years old they can?t make a claim. That?s not true.?

l Companies which do not seek immediate legal advice may not be able to claim compensation in the future.

l Businesses can be sued under the Data Protection Act if computer data on living individuals is processed incorrectly or lost because it is not year 2000-compliant.

l Companies involved in regulated sectors, such as banking and insurance, will not satisfy their industry obligations if the systems which process date data are not 2000-compliant.

l When accounting systems take in liabilities beyond 1999 these will need to be qualified if a company?s system is not 2000-compliant.

l Users should be wary of signing millennium compliance contracts with service companies. Next year, service providers are expected to sell their skills for three or more times current prices, and might find it attractive to break contracts.

l Even if a company is planning to make a claim because a system is not year 2000- compliant, due to neglect or breach of contract by a supplier, the user organisation should take steps to mitigate its loss.

l With costs for business systems achieving 2000-compliance estimated to be about #500 to #1,000 for each employee, it is vital that a user business takes a firm stance if any of these costs are to be recovered.

Clark Holt Solicitors offer this advice:

Takeovers:

When there is a takeover, the IT aspects of a company are rarely properly considered. When you buy a business, you should check that it does not have a year 2000 problem with its software.

Personal liability of directors:

Needless to say, the Americans have jum-ped on this bandwagon faster than companies in the UK. Lawyers are checking whether IT directors of businesses could be held responsible for losses suffered because of a programming problem by the company itself or its employ-ees or stockholders.

Escrow:

When a software licence is granted, a copy of the source code is usually deposited in escrow with a reputable third party, such as a bank or solicitor, for safe-keeping. If reliance on such escrow copy is to continue, it will need to be checked that it is year 2000-compliant.

Jeremy Clark Holt solicitors can be contacted on 01793 617444, or at: JeremyH@Clarkholt.co.uk.Number.

A World Wide Web

The Internet has been mainly a North American phenomenon, especially in terms of advertising spending online. Jupiter estimates that online ad revenue outside the US was $6.1m in 1996 ? 1.5 per cent of the world total.

Some of the developments driving growth in leading European and Asia/Pacific Rim markets include increasing PC penetration and the availability of more bandwidth.

Both the European and Asian/Pacific Rim online ad markets will take until the year 2000 to reach the size of the 1996 US market.

The European and Asia/Pacific Rim markets will grow at roughly equal levels, although by 2000 the European market will be larger by about 30 per cent.

Tackling the year 2000 problem

Seven user groups have joined forces to organise a conference in London in March to address year 2000 problems.

The conference, Year 2000: Mobilising UK plc, will have a stream for companies which are just embarking on the process and one for those which have already started to tackle it.

Ian Hugo, co-chairman of the conference, says: ?Many year 2000 conferences are about creating awareness. We are trying to take it to stage two of the process while acknowledging stage one.?

The speakers will include users from Abbey National and the Corporation of London.

For more details, contact 01488 681004.

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