More users dispute contracts

The number of IT contract disputes has risen markedly in the past nine months as users are being far more strict on performance...

The number of IT contract disputes has risen markedly in the past nine months as users are being far more strict on performance levels, lawyers revealed last week.

An increasing number of companies are refusing to pay for IT projects, partly because of the economic slowdown, said Andrew Horrocks, IT partner at law firm Barlow Lyde & Gilbert.

"There have been a lot more contract disputes in the past six to nine months," he said. "Companies are trying to find ways not to pay for projects because they are feeling the financial effects of the slowdown."

Common complaints from users are that implementation has taken too long or that software only does "exactly what is says on the tin", without leading to performance improvements, Horrocks said. These perceived problems occur because contracts are "habitually badly drafted", he said.

"Contracts often do not outline whose responsibility it is when, for example, software does not work, - is it down to the software itself or is it the hardware provider or maybe the system integrator?" he asked. "This leads to arguments about what the other party did, with a lot of finger-pointing."

Measurable performance indicators need to be clearly drafted in IT contracts, advised Kit Burden, IT partner at Barlow Lyde & Gilbert.

"The contract has to make crystal clear exactly what the project is expected to achieve. This is quite often not the case - one contract I looked at simply said, 'The software will lead to performance improvements'."

David Roberts, chief executive of IT user organisation The Infrastructure Forum, said he was not surprised to see contract disputes on the rise. "It is another indicator that the current costs of IT are too high," he said. "What users need is a closer relationship with a smaller number of suppliers."

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