C O U N T R I E S I S T H A T T H E P R O D U C T L I A B I L I T Y L A W I N T

C o u n t r i e s i s t h a t t h e p r o d u c t l i

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C O U N T R I E S I S T H A T T H E P R O D U C T L I A B I L I T Y L A W I N T H E U N I T E D S T A T E S I N C L U D E S S T R I C T L I A B I L I T Y - A M A N U F A C T U R E R C A N B E H E L D L I A B L E F O R A D E F E C T I N A P R O D U C T W I T H O U T B E I N G F O U N D N E G L I G E N T . Figure 5:PD10 Unit 06 Presentation 2 Slide 5
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10 The nature of a software product affects which liability laws apply. For example, implied warranties apply only to the sale of goods and not to services. Therefore, considering a software system a “service” means only liability claims of negligence and breach of an express warranty can be made. M I N I M I Z I N G L I A B I L I T I E S So far, this unit has talked about the liability of software producers for damages caused by their software products. This begs the question of how software producers can protect themselves against excessive liabilities. In the unit on Perfect Software, we saw that, at a minimum, software producers can hire highly qualified developers, employ a systematic development process, and test their products extensively. Taking these steps will reduce the number of errors in a product and will protect the producer against charges of negligence. However, they will not eliminate all errors and errors that remain in the product pose a liability risk. To mitigate these risks, software producers often take legal measures to reduce, shift, or share their risk of liabilities - typically by asserting warranty and liability disclaimers in contracts and licence agreements.Do you remember end-user licence agreements? These are the agreements that users often enter into blindly, by clicking on an “I agree” button before accessing a new piece of software. Those agreements often include clauses that limit a user’s ability to seek compensation in the event that asoftware error causes major losses or damage. This unit will conclude with looking at what these clauses can say. W A R R A N T Y D I S C L A I M E R S At one extreme is total disavowal of any warranty or liability, as represented in the Figure 6. These are in the forms of disclaimers or express limitations, usually expressed prominently in clauses of a procurement contract or licence agreement. Such clauses are often in all capital letters because the law requires disclaimers and limitations on liability to be conspicuous. In other words, they are to be displayed in such a manner S O F T W A R E W A R R A N T I E S A N D L IA B I L IT I E S (P A R T 3 ) : L I M I T I N G R I SK O F L IA B I L IT Y Figure 7:PD10 Unit 06 Presentation 3 Slide 3 © University of Waterloo and others Figure 6: PD10 Unit 06 Presentation 3 Slide 2
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11 that it is reasonable to expect the buyer or user to notice them and hopefully to read them!Note that a disclaimer of warranty is different from a disclaimer of liability. A warranty deals with promises about the quality of the software or its suitability for a particular purpose. A disclaimer says that the software producer makes no promises about the quality of the software. D I S C L A I M E R O F L I A B I L I T Y In contrast, a disclaimer of liability is a disavowal of any responsibility to compensate the users, or others, for damages incurred from the use of the software. The disclaimer may try to be comprehensive and list all of the possible damages that a user might incur, disclaiming the software producer’s liability for any of them. Because software can play an integral part of a business (to the point that a software fault could cause the entire business to fail), you might see explicit disclaimers for consequential damages, like loss of income, loss of customers or goodwill, or the costs associated with a work stoppage.However, there are some countries, provinces, or states that have local consumer-protection laws that take precedent over warranty disclaimers. In those cases, recognition by the courts of those disclaimers is not likely. For example, when software is embedded in a consumer product, like a programmable thermostat or a smart television, it is unlikely that the software producer can legally disclaim warranties of merchantability and fitness for a particular purpose. More generally, a court may rule that a total disclaimer of liability is unconscionably one-sided, unfair, and surprising to the buyer. In contrast, total disclaimers (Figure 8) may be acceptable in public licenses for open source software because in those cases, the software is being freely given away. Such software is made available to the community in order to be improved, so there is less expectation by the user that the software is complete or of high quality. S N A P C H A T W A R R A N T Y © University of Waterloo and others
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