What you need to know — Whether you are the supplier or the client, the scope and intensity of your obligations may vary depending on the type of project and the terms and conditions of the contract for the instalment and implementation of an information technology solution, such as a software suite or a migration to a cloud-based solution:
- If the supplier’s role is specific and well-defined, its obligation may well be one of result, meaning that the supplier will not be excused for not fulfilling it unless it proves that its failure to do so was due to force majeure.
- If the mandate the supplier must perform is subject to vicissitudes or uncertainties (as is often the case), its obligation will only be one of means; that is, to act with prudence and diligence. The more the supplier’s mandate is general in nature, the more its obligation will be subject to vicissitudes and likely to be considered by the courts as a mere obligation of means.
- If the project is to be carried out jointly, as is also often the case, the parties will be considered to share responsibilities, such that the client will also have obligations towards the supplier. In such situations, the parties are essentially each bound to deploy the necessary efforts and resources to ensure the project is carried out efficiently and effectively, to the extent commercially and reasonably possible.
It is thus important to bear in mind that projects for the implementation of IT solutions involve not only challenges that are specific to information technology, but also give rise to issues that may directly affect the client organization’s activities and performance.
Attention must therefore be paid not only to the terms and conditions of use or the licence rights that govern the use of the solution, but also to the terms specifying the respective obligations of the supplier — whether it is designated as a consultant or integrator — and the client. It is thus important to take all of the foregoing into account when drafting a call for proposals and negotiating the applicable agreements, and to consult with a legal advisor.
Informatique Côté Coulombe Inc. v. Produits chimiques Magnus Ltée1 — This case is an instructive example. In October 2006, the parties concluded various agreements, in particular one for the sale and installation of an integrated software suite, including updates, maintenance and technical assistance.
The client, the defendant in the proceedings, encountered difficulties with the software after the installation, and accused the supplier (the plaintiff) of having botched its installation and of not being able to fix the numerous problems the client was experiencing. The supplier, who had not been paid, sued the client, alleging that the problems were due to improper use of the software and/or a lack of training associated with poor internal management of the project by the client.
The Court allowed the supplier’s action, based essentially on the following conclusions:
- The parties agreed that they would act as a team in implementing the software. The client had an important role to play in the success of the implementation: while the supplier had the obligation to provide the software and know-how for the project, the client was obliged to deploy the necessary human resources.
- The supplier had only an obligation of means, not of result. This was not a fixed-price or turnkey contract, and the unsuccessful implementation was not due to any failing or shortcoming on the part of the supplier.
The Court’s conclusions were based on the wording of the contract, the supplier’s representations, and the correspondence between the parties. The evidence disclosed various material factors, including:
- a bank of hours was established for the implementation, as well as a bank of hours for the customization of the software suite;
- the importance of the role of the client’s project manager and the availability of the employees in the departments involved;
- the fact that the client was designated as the project lead, and the supplier’s resources were to be used only for assistance in the software’s deployment; and
- the fact that the installation of the software required the client to agree to and make major changes in its activities, which necessitated devoting a significant amount of time to the implementation of the solution.
Finally, the Court concluded that the various modules of the software solution were functional and that the failure of its implementation was attributable to deficient project management by the client. The Court noted in particular that the client failed to provide some key information regarding its business processes.
The Court therefore ordered the client to pay the supplier’s invoices, notwithstanding the failure of the software implementation.
|This article is not a legal opinion. Moreover, it essentially reproduces some of the expressions in the judgment referred to above in order to remain as faithful as possible to the Court’s reasoning. For more information, we recommend that the reader refer to the judgment in question, which is available online.2|
1 2018 QCCS 1494