How to avoid disputes regarding technology
Situated nearby to main courts in London, including the Technology and Construction Court, Saunders Law is ideally placed to deal with dispute resolution and commercial litigation related to technology.
The article below outlines some of the most common issues that lead to disputes and litigation involving technology, and tips for how to avoid disputes occurring pre-emptively.
If you already have a commercial dispute, get in touch with us on 0203 811 4850 to see how we can help.
Commercial litigation involving technology often features the same recurring issues. Our lawyers set out quick outline of the most common issues based on their experience below, and what to look out for.
Safeguarding against these issues in commercial technology contracts, may help you avoid an expensive and lengthy dispute later arising.
- Failure to check terms and conditions
Once you sign terms and conditions, you are held in law to be bound to them, whether or not you have actually read or understand them. Take time to invest reading through, and taking advice on any unusual terms. Terms can be implied by statute, and some terms may not be legally enforceable, so taking legal advice is essential. Once you sign, it may be too late.
- Failure to set out all the terms or record variations
Tech contracts adopt over time at pace, especially in experimental projects. Keeping a track of all variations that are agreed, and expressly signing them as agreed, can help minimise risk of later disputes.
- Misrepresentation of the techs ability
Many tech companies over promise and under deliver to secure a deal. If they do so, this may constitute misrepresentation in law and could lead to compensation penalties, or the entire contract falling away. It also leads to lack of reputation which may be impossible to recover. It doesn't pay to mislead another party, and very often leads to litigation.
- Fixed term / inability to terminate services contract
If a tech company insists on a fixed term lengthy services contract, with no right of earlier termination, consider whether you can trust there will be no issues, and can you afford to agree if something goes wrong. Insist on some break clause, or carefully check the customer service of the other party.
- Late delivery
Commercial tech contracts usually help a party meet some other existing or future legal obligations. Many disputes arise because a key deadline is promised by missed. If time was essential, this may lead to compensation. Putting in financial penalties may help discourage lateness or offer some redress.
- Understated prices
Many tech companies outline an initial estimate which is grossly exceeded due to unforeseen complications or is done purposefully to hook the client. If the budget is fixed, try and insist on fixed terms, or factor in some leeway if only estimates are provided. An estimate which doesn't provide for contingencies, may suggest a lack of planning.
- Issues with quality of subcontracted work
Aspects of technical work in tech contracts are often subcontracted, either due to time issues, or as the work needs specialist input. If the subcontracted work is poor or not fit, you may remain liable to the customer for this fault. It pays to use trusted subcontractors and check the works, and make sure the other side is aware you are doing so.
- Failure to consider chains of contract
Especially in tech contracts, the work between two parties for a specialised task, could be a key aspect of much bigger contract for an end client. It is worth checking who the end client is, what the value of the end contract is, and to assess risk if something goes wrong, or seek to limit or reduce liability.
- Loss of confidence and wrongful termination
It is very common for tech contracts to start off with high hopes and good intentions, and quickly descend into clash of personalities and loss of faith. The client may lose faith without good reason, or realise they can get a better deal elsewhere. Clients often raise issues artificially to try and pull the plug. If a client terminates without good cause or before the agreed stages, a claim may arise.
- Not following notice provisions carefully
If termination of a tech contract is possible, it is sensible to put in careful provisions how to do so. If a party fails to terminate properly, this can constitute a breach itself. It pays to follow proper process.
- Failure to limit liability
It can be possible to limit financial liabilities in commercial tech contracts, and many businesses fail to do so. It could prove an essential safety net if litigation ensues.
- Reliance on badly drafted penalty clauses
Automatic financial penalties set at arbitrary round figures are likely unenforceable, unless they represent a genuine pre-estimate of commercial loss. Random figures will not likely be upheld at court, but are often relied on mistakenly, and as a ground for terminating contracts.
- Breach of intellectual property rights
If someone invents new tech commissioned by the company that employs them, the company may own the invention. If someone tries to jump ship or set up on their own, they may face an IP claim from the company.
If you copy someone else's tech, on the basis that it has not been formally registered as intellectually property, you may still face a claim under unregistered design right law by the inventor, and be prevented from profiting. It pays to take early advice.
Tech commercial contracts are often high value, complex, and with high stakes and are rife for litigated disputes and claims.
Taking early legal advice is essential.
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