Your rights as a buyer of software programs

You cannot operate a business larger than a lemonade stand anymore without using computers. In construction, computers have come to revolutionize how goods and services are delivered to customers. Construction companies use everything from simple, off-the-shelf programs to specialized estimating, job costing and cad programs, some of which are custom-designed for their particular applications. Frequently

You cannot operate a business larger than a lemonade stand anymore without using computers.

In construction, computers have come to revolutionize how goods and services are delivered to customers. Construction companies use everything from simple, off-the-shelf programs to specialized estimating, job costing and cad programs, some of which are custom-designed for their particular applications.

Frequently installed equipment has internal computer components that you have to stand behind, and it has to interface with customers’ own systems. It’s a whole new ballgame.

What are the rules? Bringing computer software vendors in as new players in the construction ballgame presents some challenges because they have developed their own set of rules, some of which are a little different from what we all are used to. The first challenge for the contractor-purchaser is to figure out what you have agreed to.

If you are buying a large custom computer system, you probably will have a formal contract containing a software licensing agreement.

If you buy a software program at the local computer store, you may find that the outside shrink-wrap cover contains a sticker warning you that if you use the program, you have accepted the vendor’s terms.

Or, if you access a program through the Internet, you may find that you are required to accept the license terms by clicking your mouse before you can have access to the information.

Whichever of these situations you face, the net result is the same: in order to get the software, you have to agree to the vendor’s rules. Since the vendor develops these rules, it should not surprise you that these agreements are drafted to favor the vendor.

In general, two legal issues arise: limitation on liability by the vendor for problems that you might encounter and limitation on your right to use the software.

Limitation on vendor’s liability. For mass-produced software, you can expect every program to be accompanied by an agreement that limits you to little compensation in the event the program fails to live up to your expectations — generally, the lesser of the cost of the program or the cost of fixing the problem. If a system fails because of a software glitch (such as a Year 2000 problem), do not expect the vendor to reimburse you for the lost data or interruption to your business, unless you have specifically negotiated an exception. For a $19.99 or even a $99.99 program, these vendors and manufacturers are not about to take on such potential liability.

Limitation on purchaser’s right to use the program. Manufacturers have generally invested a substantial sum of money in the development of their programs, and they mean to recoup that investment by selling lots and lots of copies of the program, on which they hold the copyright.

You should expect their “contracts” to severely limit your right to use the program by limiting it to the actual computer on which you install it. Do not assume that you can use it on multiple machines or on a networked system without specific permission, and don’t even think about making a copy to use when you work at home. The penalties for such use are very steep, and many firms have had to pay well into six figures for unauthorized use of software.

How will the vendor know if you do this? By offering a hotline for reporting violations and rewards to those who choose to be identified. As with other areas of law, competitors and disgruntled former employees might be inclined to report on you even without the financial incentive of a reward.

Generally, you will not face much exposure if your violation is small and innocent, such as where one of your employees copied the program without your knowledge. But wholesale pirating of software is aggressively fought and can be an expensive lesson for a small company.

Year 2000 compliance. Equipment with date-triggered computer components can fail on Jan. 1, 2000, if the program was set up only to recognize the last two digits of the year. It will assume the year to be 1900. Some of the equipment that has already been identified are frozen atm machines, jammed elevators, unlocking safes and self-canceling transactions.

This will be a particularly sensitive issue for contractors because equipment that is being purchased and installed now will likely still be within the standard one-year construction warranty as of Jan. 1, 2000.

Contractors should be proactive on this issue. Contact all recent suppliers, asking them to assure you that equipment you have purchased for your customers is Y2K compliant. Pass this information on to your customers, at the same time asking them to identify any other equipment you sold them about which they have Y2K concerns. Now would be an excellent time to start this correspondence. A year from now, every vendor will be up to his neck in Y2K questions and you will have a harder time getting his time and attention.