Legislation to protect companies against Y2K liability

Legislation to protect companies against Y2K liability

The Federal Government will finally attempt to combat growing concerns over Y2K liability when a bill similar to the United States Good Samaritan Law is introduced to Parliament later this week.

According to the Minister for Communications, Information Technology and the Arts, Senator Richard Alston, "many companies are hesitant to disclose the state of their Y2K readiness, or to seek or offer help for fear that their statements could lead to legal action."

This legislation aims to compel companies to disclose their readiness for the onset of the millennium bug and assuage doubts that a consequent lack of performance will begin an avalanche of civil liability suits against them.

However it is not intended to be a wall for companies to hide behind if they are unprepared for 01/01/00. Organisations must make statements in a "non reckless" and "honest manner", according to a statement from the Senators office.

Senator Alston is implementing the law in the hope that it will motivate open discussions on the issue of Y2K compliance. Alston is anticipating that the law will penetrate small businesses reticent about announcing either their compliance or susceptibility to the millennium bug. Senator Alston suggests this is problematic because individual concerns are not the only thing at stake, it will come down to a matter of "supply chains." The intention of the legislation in this regard is to inspire "larger companies -- such as banks -- to assist their smaller business customers."

However, industry experts have expressed serious doubts about the viability of the venture. Jamie Nettleton, a partner at Sydney-based law firm Norton, Smith & Co stipulates "it may encourage discussion, but the whole idea is for traders to make the statements that will be completely accurate [in presenting] a company's position. The difficulty with this legislation is that it is going to relax the principle that statements made must be completely true and accurate and people affected by the inaccuracy of those statements will not be able to take action unless they are being made in good faith. But, whether they were made in good faith will be up to lawyers to decide." (see ARN page 38, January 27).

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