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Liability danger for resellers

Liability danger for resellers

Resellers can face expanding legal liabilities as they move from hardware and software sales and into systems integration, according to Michael J Perkins of Hutten & Perkins, a Sydney attorney specialising in IT service agreements and intellectual property.

Perkins says that the industry is seeing a rise in the reliance of resellers to install turnkey systems to meet specific customer requirements. This in turn creates an additional area of liability to resellers over and above what retailers have traditionally had to face if product specifications are not met.

Perkins is among a dozen speakers presenting papers at Australian Reseller 96 at Sydney's Centrepoint during July 27 and 28. "Another danger that is starting to emerge is the product liability risk that can also hit resellers if they are doing direct importing of equipment from overseas and are starting to become not only resellers but importers," he said.

Perkins offers this example: "A reseller is selling into a graphic design studio and the studio specified a hard disk of a particular throughput. The reseller relied on the hardware specifications from an overseas manufacturer. It turns out that the specs were wrong and the hard disk could never perform the levels that were required by the studio. The reseller was subsequently sued for $25,000 by the studio based on its loss of profit because they couldn't get the work completed in time. It was a $7,000 unit, probably $1,000 profit for the reseller but ended up being a $25,000 liability," he said.

Without wanting to steal too much of the thunder from his planned speech at the upcoming forum, Perkins's advice for resellers is "Understand your responsibilities, ensure sufficient quality procedures are in place to minimise risks and make sure you verify product specifications and capacities."

Seminars will be conducted by Dataware, System Solutions, Microsoft, Lotus Development, ACA Pacific, Clear Distribution, Cisco Systems and Market Results.


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