Friday 29th April 2022 from 9am

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Businesses Beware of IT Contracts


It seems that as a business owner in the modern day business world, at every turn you are faced with digital technology and constant movements in the IT world.

In an industry that is literally exploding before our eyes, it is estimated that $4 trillion will be spent in IT alone during the 2014 calendar year.  This is a staggering figure but it is not surprising given the rapid changes in the way that we do business and, more importantly, the devices that we are now using to do that business.

Despite the fact that businesses are spending more and more money on IT related devices and the hardware that sits behind this in their main office, it is fairly rare that business owners are obtaining legal advice in relation to fairly complicated contract documents that they are signing when they agree to take on this new technology.  We are all familiar with the pages of special conditions and small type that we skim over when signing up for our new mobile phone.  Unfortunately, this seems to be the way that people are dealing with more expensive IT contracts that involve multiple devices, servers and cloud services for small to medium sized businesses.  Many of these agreements are set for at least 2-3 years and have penalty clauses if you wish to get out of the contracts prior to their expiry.  Some agreements also have related chattel finance agreements with very high interest rates and severe penalty clauses if you seek to terminate these prior to their expiry date.

We have also noticed a spike in client enquiries regarding problems that they have experienced with IT providers and so-called “consultants” who are steering them into expensive long term agreements with large IT providers and financing agreements.  In some cases these “consultants” are setting up the agreements with little or no explanation to the clients and disappearing after the clients experience problems with the equipment provided and/or the contracts entered into with finance companies.

All businesses need to be aware of any contracts that they enter into with their suppliers but in particular need to be careful with IT contracts and the liabilities that the business owner is signing up for. In the rush to compete in the digital technology world, it is easy to overlook some fairly obvious warning signs with these contracts.

Our advice to all business owners is to take a deep breath and obtain appropriate legal advice in relation to any contracts that are entered into.  This could save you a lot of time and anguish down the track.

If you would like more information or want to obtain the best possible chance of a successful outcome in your dispute, please contact our Commercial Litigation Department Manager, Amanda Heather on direct line 07 5506 8245, email or free call 1800 621 071.

We have an experienced dedicated Commercial Litigation team that practice exclusively in these areas.

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