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Opinion: Make sure your customers have backup

Opinion: Make sure your customers have backup

Just occasionally I reflect on the benefits of having been around for quite a while. Last week, Richard-the-staff-solicitor presented me with a certificate: ‘The MS-DOS Award – for excellence in proper, old-school computing: for telling Richard to put .doc on the end of a file name so that MS Word will recognise the file’. He added “Some junior staff members ought to know better”. “Quite right,” I said. “I predate MS-DOS.” Alas, it’s true. My first computer pre-dated disks and had to be programmed with Basic. We backed up on tape – it was the only way to store data.

I’m hearing about a lot of real doozie complaints at present involving people who try to get resellers to pay for their lost data when something goes wrong with their computer, and they haven’t done a backup. It’s a sort of culture of blame: I’m hurting so I have to find someone else to blame. As against: I’m hurting but when you look at it, the only person able to do a backup was me!

Now, I do think there are some very unusual circumstances where people might be entitled to make a claim for loss of data, such as when you supply them with a computer and backup device, and both have faults. Of course, if they are business customers, you should have contracted out of liability in writing, in the terms of trade that you have given to customers before they entered into a contract with you. But if you haven’t done that, even business customers might be able to claim – under the Consumer Guarantees Act, which applies to supplies of consumer products – goods and services of a type ordinarily acquired for personal, domestic or household purposes. Like computers. You can only contract out of that act in writing with a business customer.

When a product fails to comply with a Consumer Guarantees Act guarantee, consumers are entitled to remedies that include compensation for losses reasonably foreseeable as being liable to arise from the failure. This might include (as an awful example) repairs to a house if the defect to the product causes a fire; (ask The Warehouse and the manufacturer of the electric blanket that was held to cause $50,000 worth of damage – or their insurers). But hang on – is the loss of data both reasonably foreseeable (possibly, depending on the nature of the defect) and arising from the defect? This second point is usually overlooked. What caused the loss? The failure of the product, or the failure to backup?

After all, if a kettle fails, we don’t expect the retailer to provide us with free cups of tea – we are expected to take care of ourselves and have a plan B. The trouble is that consumers don’t take backup seriously, and don’t have their plan B. From the legal perspective, it is well established that the courts will look at the cost of avoidance of loss – who can do it best and most cheaply. Clearly it’s consumers – after all, a backup device can be as cheap as a DVD or a USB drive, and they’re the only people able to actually do it. Further, even in the unlikely event that a reseller was liable, the consumer has a duty to take the lowest cost steps to avoid and reduce loss where that is a lot cheaper than paying for damages. And if that means consumers buying backup devices – heck, you’re all resellers. Spread the word about backup. It’s got to be good for you!

Rae Nield is a solicitor specialising in marketing law. This article is intended for general information and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at raenield@marketinglaw.co.nz.


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