As predicted, Y2K liability claims have already begun to rear their ugly heads in Pittsburgh, but you may be surprised at the outcome of the nation’s first case to reach the courts.
Pittsburgh-based ASE Ltd. signed a contract in 1995 to develop and install an enterprisewide computer system for INCO Alloys International of Huntington, W.Va., over five years.
At one point, INCO halted the contract and, ultimately, tried to make a legal claim for $3.9 million in what it called Year 2000 remediation damages. The company claimed ASE was liable for the cost of making changes that would make the new computer system Year 2000 compliant, even though no such tasks had been included in the ASE contract.
A federal district court-designated arbitrator rejected the claim, citing the fact that no such obligation had been expressed in the 1995 contract.
The moral of this story, says Arthur Schwab, chair of litigation at Pittsburgh law firm Buchanan Ingersoll P.C., and ASE’s trial attorney in the case: “The decision is a warning to any company purchasing, using, selling or developing software, that contracts involving software development should identify all specific Year 2000 tasks to be performed and clearly describe any Year 2000 obligations.”
