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Reflections on an Uneventful New Year Beware of trading partners who request absolute Y2K warranties now and make the argument that the passage of the 12/31 to 1/1 date makes this easy for you to give. Mary M. Luria Mitchell W. Karsch e-mail this article URL We have just celebrated the New Year as this article is being written. As it turned out, those of us who had dinner with a generator handy and two doctors in the house did not really need that level of support in order to avert disaster and enjoy the evening. There are some glitches showing up now that people are back at work, a few Y2K failure claim letters are being sent and received, and people are now more worried about February 29, 2000 than about the 12/31 to 1/1 transition - and, by the time of publication of this article, it should be clear whether that worry is justified. What should be done or not done by prudent companies in areas outside the handling of claims discussed in prior columns: • Remove obsolete Y2K content from Web sites. There seems no compelling reason to replace general information or contingency plans with an update. If you do choose to update rather than remove, be cautious what you say, that you make it clear when and on what basis you are saying it, and label it properly under IRDA as a Year 2000 Readiness Disclosure and/or Year 2000 Information. • Keep and continue to update Y2K productinformation on Web sites to enable you to claim that its availability requires potential claimants to mitigate by using the information in the manner specified - e.g., by ordering fixes or new versions, while ceasing use of non-compliant products. In fact, your response to claim letters should make this very point. • Do not post substantive "We made it" claims on the Web site. It is too soon to do so, unless qualified, it may become the basis of detrimental reliance claims, and it may conflict with legally required disclosures (e.g., SEC) made later when more information is available. • Beware of trading partners who request absolute Y2K warranties now and make the argument that the passage of the 12/31 to 1/1 date makes this easy for you to give. There are a number of other date hurdles ahead, including February 29, first quarter close, etc. Such warranties are often supported by indemnities that leave you with responsibility for such open-ended items as "loss" rather than more limited direct costs and expenses. The counter argument is that the smooth transition makes such warranties unnecessary unless the trading partner can specify commercially reasonable concerns which prompt it to require assurances of continued performance. You can always offer updated (and properly IRDA - labeled) Year 2000 Readiness Disclosures in lieu of warranties if the trading partner is insistent. • Respond to all incoming claims within the 30 day period of the Y2K Act. Some response is probably in order even for claims which are not sufficiently detailed to satisfy the requirements of the Act - i.e., by responding that the claim is inadequate as a matter of law. Even claims that satisfy technical legal requirements may be inadequate for other reasons. You cannot remediate computer problems in the abstract and need to be able to replicate the problem in order to deal with it in any thoughtful way. Respond and demand more complete information about the Y2K problem, while pointing out that the 30 day period is not running due to the inadequacies of the claim letter. • Consider claim responses that encourage ADR by indicating your willingness to engage in it as a way of extending the 90 day remediation period without the cost of litigation if there continue to unresolved failure issues late in this period. Finally, every person who worked on the Y2K problem should congratulate himself or herself on a huge effort well done. If anyone suggests this was never a problem and we were all alarmists in search of recognition and large budgets, feel free to disagreevociferously. Point out that the person could be at home in the dark (possibly also cold) eating K-rations heated on a Bunsen burner. It is not always necessary to have a little preliminary bombingin order to prove that a real war was averted - as enlightened governments have known for centuries. © 2000 Davis & Gilbert LLP       Davis & Gilbert LLP • 1740 Broadway • New York, NY 10019 tel: 212.468.4800 • fax: 212.468.4888   Privacy Policy • Terms & Conditions