Morris Manning & Martin, LLP

Legal Action Items For The Year 2000 Problem

Consider the following practical pointers in addressing the Year 2000 problem:

  • Obtain software assurances from vendors relating to millennium compliance and include specific contractual language in vendor agreements.
  • Require that the vendor has conducted adequate testing of its software to verify millennium compliance.
  • Obtain indemnification protection from the vendor, just in case of Y2K compliance problems.
  • Require the vendor to have a written plan of action for addressing millennium compliance problems and remedying them.
  • Consider advisability of warranties against viruses and disabling devices.
  • Alert vendors of your company's policy of seeking assurances from suppliers that the Year 2000 problem is being adequately addressed.
  • Obtain expert assistance in assessing and addressing Year 2000 issues relating to any software developed by your company.
  • Review all existing license, maintenance and support agreements relating to any software developed by your company to determine the scope of Y2K compliance problems
  • Assess the type of disclosure to be provided to your customers
  • Establish a written action plan for addressing all Y2K problems and monitor ongoing compliance.


Software Assurances 

Millennium Compliance - Vendor represents and warrants that the Software is and in the future will continue to be "Millennium Compliant" (defined below). This warranty shall be perpetual and survive any other expiration of warranty period or the termination of this Agreement. For the purposes of this Agreement, "Millennium Compliant" means:

  • The functions, calculations, and other computing processes of the Software (collectively, "Processes") perform correctly and accurately regardless of the date in time on which the Processes are actually performed and regardless of the date inputs to the Software, whether before, on, or after January 1, 2000 and whether or not the dates are affected by leap years;
  • The Software accepts, stores, compares, sorts, extracts, sequences, and processes date inputs and date values in a correct and accurate manner regardless of the dates used, whether before, on, or after January 1, 2000;
  • The Software properly accepts and responds to four-digit year date inputs and accepts, responds to, and correctly resolves any ambiguities as to the century for two-digit year date inputs;
  • The Software outputs date values in a correct and accurate manner that correctly resolves any ambiguities as to the century, whether such outputs are screen displays, printed outputs, or electronic outputs; and
  • The Software will function without interruptions caused by the date in time on which the Processes are actually performed or by the date input to the Software, whether before, on, or after January 1, 2000.


Testing - Vendor represents and warrants that the Software has been tested by Vendor to determine whether the Software is Millennium Compliant. Vendor shall deliver the test plans and results of such tests upon written request from ABC Corp. Upon ABC Corp’s written request, Vendor agrees to participate in additional tests of the Software at no charge to determine Millennium Compliance, including, without limitation, compliance with ABC Corp’s standard compliance requirements. Vendor shall notify ABC Corp immediately of the results of any tests or any claim or other information that indicates the Software is not Millennium Compliant.

Indemnitee - Vendor agrees to indemnify and hold ABC Corp and its shareholders, officers, directors, employees, agents, successors, and assigns harmless from and against any and all claims, suits, actions, liabilities, losses, costs, reasonable attorneys’ fees, expenses, judgments or damages, whether ordinary, special or consequential resulting from any third party claim made or suit brought against ABC Corp or such persons, to the extent such result from Vendor’s breach of the warranties contained in Paragraphs 1 and/or 2 above.

Plan of Action - To the extent that the Software is not Millennium Compliant, Vendor agrees to immediately formulate and implement a written plan of action at no charge to modify the Software such that it is Millennium Compliant. A copy of such plan of action shall be delivered to ABC Corp within ten (10) business days after completion of same. 

Absence of Disabling Devices - Vendor represents and warrants that, upon delivery at any time thereof by Vendor to ABC Corp, the Software shall contain no virus, Trojan horse, worm, or other software routines designed (i) to permit unauthorized access by third parties, or (ii) to disable, erase, or otherwise harm the Software and/or data, other software or hardware.


Vendor Buying Agreement Provisions

ABC Corp does not intend to continue business relationships with suppliers of merchandise in the event the ability of the supplier to provide the merchandise may be endangered by the "Year 2000 Problem." Accordingly, ABC Corp is putting into effect policies whereby it seeks assurances from its suppliers that the Year 2000 Problem is being adequately addressed. The agreements and warranties of Vendor set forth below are in furtherance of such policies.

    1. Absence of Failure 

      Vendor represents and warrants that Vendor has tested and assessed the computer software, computer hardware, all devices (including, without limitation, machines, equipment, telephones, PBX’s, facsimile machines, and building systems) reasonably necessary to the performance of Vendor’s ongoing business operations and the production and delivery of merchandise (collectively, the "Computing Devices") owned, licensed, or used by Vendor to determine whether such Computing Devices will fail or will produce erroneous results as a result of the inability to correctly receive, store, process, or output date information regardless of the date or dates utilized, including, without limitation, related to the change of century (each, a "Failure"). 

      Vendor further represents and warrants that Vendor has prepared and implemented a written plan of action to insure that the Computing Devices, whether owned by Vendor or not, will not be the subject of a Failure (the "Millennium Compliance Plan"). 

      Vendor further represents and warrants that there will be no Failure(s) of the Computing Devices that will affect the quality of or timing of the delivery of any merchandise or the performance of any other obligation of Vendor under this Vendor Buying Agreement. 

      Vendor further represents and warrants that Vendor has contacted and received assurances from all direct or indirect suppliers of goods or services to Vendor, including, without limitation, suppliers of raw materials for the merchandise, computer software, computer hardware, and all devices, that each of the Computing Devices owned, licensed, or used by such supplier will not be the subject of Failures.



  1. Millennium Compliance Plan

    Vendor shall deliver to ABC Corp a copy of the Millennium Compliance Plan immediately upon ABC Corp’s request. Vendor shall immediately implement a plan to prevent the purchase or license of Computing Devices from and after the effective date of this Paragraph that may be the subject of Failures. 

    Vendor shall notify ABC Corp in writing immediately upon Vendor’s obtaining information that any Computing Devices owned, licensed, or used by Vendor or any direct or indirect supplier of Vendor may be the subject of a Failure. Vendor shall also notify ABC Corp in the event Vendor determines that any Computing Devices owned, licensed, or used by ABC Corp may be the subject of a Failure. 

    Upon ABC Corp’s written request, Vendor agrees to participate in additional tests of the Computing Devices owned, licensed, or otherwise used by Vendor at no charge to determine whether such Computing Devices may be the subject of Failures. Vendor shall notify ABC Corp immediately of the results of any tests or any claim or other information that indicates the Computing Devices of Vendor or Vendor’s direct or indirect suppliers may be the subject of a Failure.



Hardware Assurances

Product Millennium Compliance. 

ABC Corp does not intend to continue business relationships with suppliers of goods or services in the event the ability of the supplier to provide the goods or services may be endangered by the "Year 2000 Problem." Accordingly, ABC Corp is putting into effect policies whereby it seeks assurances from its suppliers that the Year 2000 Problem is being adequately addressed. The agreements and warranties of Supplier set forth below are in furtherance of such policies.

Supplier represents and warrants that the mechanisms for handling time and date functionality in the Products will not be affected by and will accommodate the rollover to the year 2000, and any other date. Supplier further represents and warrants that the Products will properly provide date information to and properly receive date information from any operating system delivered with such Products, although the warranty in this sentence (related to the communication between a Product and its included operating system) is not a warranty that the operating system is itself Year 2000 compliant.

Supplier will test the Products prior to delivery to ABC Corp using a test reasonably approved by ABC Corp. Unless otherwise requested by ABC Corp in writing, Supplier will not deliver to ABC Corp, and ABC Corp shall not be obligated to pay for, any Product that does not pass this test.

Prior to delivery of Products to ABC Corp, Supplier further agrees to test the Product with any testing tools provided by ABC Corp to Supplier from time to time at ABC Corp’s sole cost and expense; provided, however, if, when first used by ABC Corp or Supplier to test the Products, such testing tool shows the Products to be not in compliance with the warranty set forth in subparagraph (a) above, then Supplier shall be responsible for all costs and expenses of administering such tests. Unless otherwise requested by ABC Corp in writing, Supplier will not deliver any Product that does not pass these additional tests.

ABC Corp may also test the Products after delivery to ABC Corp. In the event that the warranty stated in the subparagraph (a) above has not been satisfied, then Supplier will immediately repair or replace the Products without charge. Supplier shall also notify ABC Corp immediately of the results of any tests or information that indicates the Products are not in compliance with the above warranty and will immediately repair or replace the affected Products without charge.