Proposals (3 of 3) – Warranties, ….

December 7, 2010

Concluding our short dive into developing proposals, we have discussed the merits of having a standard template and review process to not only improve consistency and professionalism, but also reduce and manage risk. We also addressed some common issues like protecting IP and software licensing. Let’s continue the fun.

Warranties and Indemnification

The other major aspects of T&Cs deals with the liabilities associated with the project:

  1. Warranty – basically, if it doesn’t work or stops working. How long are you responsible to fix it? Note that there is difference between providing  a warranty, which should only address the system not performing as specified and service which can include standard maintenance, updates, adaptations, ….
  2. Indemnification – what if there are damages associated with the system’s operation or failure?

Typically, these liabilities are limited in some fashion. For instance, they liabilities will not exceed the total cost of the system (or project). Note, for those who are CSIA members, there are a good list of suggested T&Cs available on their website.

Customer’s T&Cs

Now, I know this has probably never happened to you, but I’ve heard on occasion from Alliance Partners that the customer will ask to use their T&Cs. Or, send their own T&Cs with their acceptance. So what do you do? Well, first of all, you should have a defined process to review for unfair terms.

Note that if you simply accept their T&Cs, you may invalidate your own insurance policy (which was created according to the liabilities of your own T&Cs). So, a good strategy against an unruly customer may be to ask your insurer for a rider to accept the additional liability and then rebid with that additional charge.

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