An Inquisitor Calls

The Year 2000 questionnaire has become an inescapable fact of life as more and more British organisations come to grips with the Y2K problem. In June 1998, in a survey conducted for Action 2000, one third of the companies stated that dealing with the requests was an increasing burden on them.

Requests for information about Y2K compliance come in different guises - ranging from letters seeking assurances that products will be Y2K compliant (without any explanation as to what that might mean) to full blown questionnaires interrogating the lucky recipient on details of their Y2K programme and the company's state of readiness. Questions may also be asked about contingency planning and what assurances have been obtained from suppliers to the company that the supply of goods and services will not be interrupted by Y2K problems. Many questionnaires seek assurances about compliance as defined in the British Standards Institution's PD 2000-1: 1998. Others have their own homegrown technical definition of Y2K compliance.

Giving information on Y2K readiness is important for both business and customer confidence in goods and in the ability of an organisation to continue to supply goods and services, notwithstanding the Y2K problem.

What sort of answers you give to a Y2K questionnaire or, indeed, whether you choose to answer the questionnaire is a difficult question. Some law firms recommend that a company should not answer Y2K questionnaires. Another view is that commercial considerations and the need to preserve effective trading relationships dictate that some answers need to be given. This should only be done with an understanding of the legal liability for the answers to a Y2K questionnaire and for statements made about readiness and compliance of its products.

For example, it is possible that statements could be taken as representations of future contractual negotiations on which liability for misrepresentation could be founded. It is also possible that responses may constitute a post contractual amendment of existing contractual relationships.

A recent variant on Y2K questionnaires which some have received involves a double barrel demand for information on Y2K compliance coupled with a Y2K warranty which the sender intends to have incorporated into all future contracts. It is important to recognise that `contracts' in this context does not just mean documents which bear signatures. Contracts can also be created by exchanging correspondence, by purchase order, by course of conduct or even orally. By signing off on a Y2K information request, you are, in effect, agreeing to the inclusion of these warranties in all subsequent contracts.

It is important to analyse the actual area of risk. For example, demands for assurances that products are Y2K compliant are not particularly relevant to manufacturers of glassware and carpets. However, there is the issue of whether a company will be able to fulfil orders because of Y2K problems in microprocessors controlling the manufacturing process, or because of failure in financial and order processing systems. It is possible that what is actually being sought are assurances that active steps are being made to ensure that the company will fulfil orders.

Current thinking does not advocate a blanket refusal to answer any Y2K questionnaire. It is also important to recognise that Y2K questionnaires are often sent out in bulk. Those who do not answer can expect to be chased until they either positively refuse to answer or provide one.

Often it is better not to actually answer the Y2K questionnaire itself but, instead, give details of your Y2K compliance program and the company's state of readiness.

Ultimately, it is neither reasonable nor possible for any company to guarantee that it will, for all purposes and under all circumstances, be unaffected by the Y2K problem. Nevertheless, it is important to foster a climate of information exchange and to recognise what information can safely be given and in what form. PE

Jane Rawlings is an Associate of Dibb Lupton Alsop, one of the UK's largest law firms.