Dot-Com Litigation 101: Web Site Designers

By Harari, Jack | Risk Management, October 2001 | Go to article overview

Dot-Com Litigation 101: Web Site Designers


Harari, Jack, Risk Management


Like the thousands who searched the Alaskan tundra for gold at the turn of the last century, many believe they will find the next great billion-dollar Internet invention. For the lucky few, it is smooth sailing from the time an agreement is reached with the Web developer. But for most, the Web design is delayed and launch deadlines are blown by mysterious bugs and HTML glitches. The day the Web site finally goes live, a cryptic message appears on the screen: "PAGE CANNOT BE DISPLAYED." The client's dreams have turned into a cyberspace nightmare.

Litigation Analysis

There are numerous legal pitfalls that may exist when a company makes the decision to hire a Web design and maintenance company. These legal pitfalls may interrelate with various lines of insurance.

General Contract Law. Any potential litigation analysis starts with the terms of the written service agreement. Under the law, agreements may be null and void if not put down in writing. A number of questions emerge when looking at the agreement: Did the designer meet the description of services and the test-and-launch dates? (Although progress reporting and testing can help provide safeguards to minimize these risks, often clients themselves have not implemented adequate monitoring schedules.) Did the designer provide the necessary backup, server redundancy and network capacity? Did the designer provide all promised phone and e-mail support? If the relationship between the parties begins to sour due to non-performance, then any data ownership, indemnification and termination provisions will become paramount.

Uniform Commercial Code (UCC). Case law has held that the exchange of certain Web-related services fails under the UCC. This interpretation of the law potentially affords businesses a number of warranty rights, including express warranties, implied warranties and warranties of fitness for a particular purpose. The advantage in warranty law is that it is not necessarily restricted by the terms of the written agreement.

Tort Law. Aside from the general claim of negligence, there are two other theories to consider. A claim of "tortious interference with contract" may apply where a company deliberately withholds data files that are necessary for the online business to relaunch its Web site with another provider.

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