Computer projects often go wrong, but the contract can be a very useful tool in getting them to go properly. Those who do the following will not go too far wrong.
- Make sure that you know exactly what you want and what is achievable because if you do not know, then you are not going to get the contract right. Among the most common causes of computer project failure are unclear customer requirements and / or unrealistic customer expectations.
- Make sure that all prospective suppliers sign a confidentiality agreement with you. If you are going to give them a detailed functional specification of what you want and information about your business you do not want there to be any question of that confidential information being obtained by your competitors.
- Beware of falling into the trap of entering into a contract before you intend to. There are no legal formalities in this country about entering into a computer contract. So make sure that all pre-contract correspondence is headed 'subject to contract'. If you leave discussions about a written contract incomplete (eg lots of drafts backwards and forwards between you and the supplier but nothing ever signed) then a court is likely to take the last draft as being the basis of the contract between you and the supplier.
- If a particular point is important to you make sure that you get it in writing from the supplier. It may well be that one aspect that is critical to you is not dealt with in the supplier's draft contract at all. If so, you must, for evidence's sake, get it in writing from the supplier.
An ordinary letter from the supplier is sufficient provided that it is either cross referred to in the main contract or, possibly, included as a schedule or as an attachment.
If the supplier drags its heels and, despite repeated requests from you, refuses to confirm a point in writing, you should write to the supplier saying that you are only entering into the main contract on the basis that this point is agreed.
If the matter ever goes to court the production of your letter saying this will bring tears of sadness to the supplier's lawyer and tears of joy (well almost) to your lawyer. - Make sure that you get the supplier to agree to supply support and maintenance for the products purchased for a decent length of time, say five years. You do not want the supplier cancelling support after a couple of years just when your new system is working well.
Note that you do not have to commit to take the support and maintenance for five years. Ideally your commitment should be on a year by year basis. It is just that the supplier agrees to make the support available to you for at least five years if you want it. - Make sure that you order enough training. One of the most common reasons for the failure of a computer project is inadequate training. It is sadly all too common that, if there is an overspend in other areas, the amount budgeted for training is cut. As a rule of thumb, roughly 20% of a project's cost should be spent on training. If it is substantially less than that you should ask why.
- Make sure that the procedure for acceptance testing is known and agreed. If this has not been sorted out in the contract, how are you going to stop a bad system from being installed? In the past the test data was generally supplied by the customer; nowadays it is more acceptable for it to be provided by the supplier.
- Make sure that you can get access to the source code of the software programs supplied if the supplier either goes into liquidation or stops supporting the software. Ideally, this source code should be deposited with an independent third party and kept updated by the supplier as each new version comes out.
Finally, never forget that the contract is a delivery mechanism for ensuring that a project is completed in the right way at the right time by the right person and for the right price. No more, no less.
By Jeremy Holt, Clark Holt Solicitors
