Low profit margins, tight budgets and a competitive market increase the pressure on IT managers to reduce their legal spend by avoiding disputes. Handling a dispute can be an unnecessary and unwanted strain on the resources of any IT manager and can often be avoided. The key is contract and project awareness.
The contract you sign with a supplier or customer governs your relationship and all your dealings with them, so you need to be familiar with it. Too often this document is no sooner signed than it is put in a drawer and forgotten, only to be unearthed when things have gone wrong.
Keep the contract with the project and implementation plans, refer to it frequently and follow its procedures. If you want to vary the services provided by your supplier, follow the change control procedure. Or, if you are acceptance testing, ensure you understand the criteria and procedures, which are often agreed after the contract is signed.
Avoid disputes by being aware of the key areas in your contract and having regular project meetings. For example, in a software licence you need to know the number of users allowed, and the number of locations/servers allowed. Likewise, in a hardware contract, you need to know the warranty periods. Also, ask yourself when responsibility passes for insuring the goods: is it delivery or installation?
As well as contractual awareness, there are three other good practices to adopt to both help to avoid a dispute, and to assist you in the event a dispute arises:
Follow up outstanding issues
Once a contract is signed there can be matters that still need to be resolved, such as acceptance criteria. Ensure these are dealt with as soon as possible and put in writing to avoid any later misunderstanding.
Keep a paper trail
This can be by e-mail but the key is for it to be complete.
Recap what you have agreed in clear terms that leaves nothing outstanding. Deal with issues as soon as they arise.
Even when every precaution has been taken and best practice is followed, disputes can arise. If you find yourself having to deal with a dispute, contract awareness is a first step in resolving it. Look for a dispute resolution clause in the contract and escalate. It will set out the procedure for resolving the dispute and should be followed.
If no procedure is in the contract, consider an appropriate form of dispute resolution and take advice where needed.
Justin Byrne and Charlotte Digby are IT litigation specialists at law firm Eversheds