Solent Group Report: The Millennium Bug – The Legal Issues

June 30, 1998

The Group had two outstanding speakers for this meeting: Tom Glasson ofTaskforce 2000 and Mark O’Conor of Bird & Bird.

Amidst the maelstrom of publicity and advice the Millennium bug has attractedin the past year, Tom Glasson’s message was one of calm reflection.

There is no doubt that the bug presents a real threat to businesses acrossthe world and the costs of handling the problem are phenonemal. In October 1997Cap Gemini estimated the costs to British industry at £23 billion, by February1998 they had increased the estimate to £32bn – largely because of inactivityon the part of the business community.

Tom’s view is that now is a good time to stand back from the problem andrecognise that this is an exercise in risk management – the goal being to ensurebusiness continuity. He suggested the following rules.

  • Minimise the project. Deal only with those matters over which you have influence. Concentrate on business critical systems.
  • Find low risk solutions.
  • Use available tools.
  • Share information. Join a group such as the UK Year 2000 interest group (contact 0118 977 6915).
  • Test, test and test again.
  • Talk – with your suppliers and business partners.
  • Prioritise. Test dependent and business critical systems to nth degree.

Contingency planning is essential. It will involve:

  • risk assessment
  • rationalising requirements
  • diversifying suppliers
  • replacing/duplicating critical parts
  • formation of alliances
  • modify/test DR plans
  • education of business partners.

Mark O’Conor spoke on the legal issues arising.

As to future contracts, insist on compliance but be clear what this means,use phraseology that addresses the problem directly. There are recommended formsof wording – use them if appropriate.

How might you go some way to achieving a bullet-proof contract? There arethree essential areas to consider:

  • Warranties: review good and bad clauses, look at contract as a whole, beware of cross warranties and ask whether making compliance a condition of contract would suit your client better.
  • Acceptance: get a demonstration of compliance.
  • Source Code: ensure access to this if the software is not compliant.
  • Review all past contracts, including licences, support and maintenance, FM, outsourcing and PFI. Ask is it all down to me or should anyone else chip in, and carefully marshall your arguments.
  • Establish what express warranties there are, the extent and scope of any implied warranties. Establish too how far back might a court extend such a warranty? Consider what damages might be awarded.

The bug also raises other legal issues including whether claims are barredunder the Limitation Act, the extent of directors’ liabilities, duties underhealth and safety legislation and whether there is liability in tort. Where dataconversion becomes necessary, you should be aware that tampering with dataraises issues for data protection and may call into question the evidentialstrength of data.