En février dernier, la Cour d’appel du Québec a rendu une décision comportant des implications majeures relativement à l’interprétation des contrats de services risquant très certainement de modifier la façon dont ces contrats sont rédigés et négociés. Bien qu’il soit admis que les dispositions du Code civil du Québec applicables aux contrats nommés, dont le contrat de services, soient de nature supplétive, la question de savoir ce qu’il advient lors de la reconduction du contrat au-delà du terme prévu intialement demeurait sans réponse. Dans Services Matrec inc. c. CFH Sécurité inc. la Cour d’appel doit déterminer si une renonciation à … Continue Reading
For a customer of outsourcing services, it is crucial that the outsourcing services agreement include well-drafted, clear and specific remedies to address vendor service performance failures that will have a material impact on the customer. A good example of what can happen when a service agreement is deficient in this area are the recent decisions in the ongoing litigation between the State of Indiana and IBM over a ten-yearperiod, $1.3 billion contract for IBM to modernize and manage the State of Indiana’s welfare system.
Less than three years into the ten-year contract, the State terminated the contract for cause citing … Continue Reading
2013 was a very active year in the tech sector in Canada. Some of the leading developments over the last year are summarised below.
Tech Transactions – Turbulent Year for BlackBerry (Fairfax transaction)
2013 was a turbulent year for the Canadian leader of the telecommunications industry. It started with a change of name, from Research in Motion Ltd. to BlackBerry, in order to rebrand the company and to be more successful on the stock market. A few months later, BlackBerry publicly announced that it was reviewing its strategic alternatives for the future. In November, BlackBerry received an investment of U.S. … Continue Reading
At McCarthy Tétrault’s 3rd Annual Technology Law Summit, moderator Barry Sookman, and panelists John LeBlanc of Scotiabank and David Crane of McCarthy Tétrault, lead a discussion on procuring and contracting for cloud based services. Top takeaway tips from the session include:
Cloud is Everywhere: Be cognisant that software and services that use the cloud may be in use in your organization without your legal team’s knowledge – including employee teams using collaboration or information tools (like dropbox or box.net) for small projects or one-off uses that haven’t gone through a typical procurement process (or legal review). Another example … Continue Reading
Outsourcing and cloud computing service engagements are fraught with financial, security and other risks, especially if dealing with an unproven service provider. Obtaining a third party assurance report with respect to a service provider’s internal controls can provide some comfort. However, customers are often confused about what kind of assurance report they should obtain.
Canadian Standard on Assurance Engagements 3416 (CSAE 3416), Reporting on Controls at a Service Organization, is the Canadian accounting standard for reviewing and reporting on controls at a service organization. It is issued by the Auditing and Assurance Standards Board (AASB) and is equivalent … Continue Reading
At McCarthy Tétrault’s 3rd Annual Technology Law Summit, Charles Morgan, Barry Sookman, George Takach (all of McCarthy Tétrault) and John Chang of PricewaterhouseCoopers were featured in the Innovation in Outsourcing panel. Top takeaway tips from the session include:
Do your Diligence: You would never buy a company without performing comprehensive diligence first, and you should take the same approach to signing an outsourcing contract. Diligence ought to be thorough and rigorous – go to the facility where your data will be stored and ask tough questions about network latency, data security, service levels, technical infrastructure and privacy.… Continue Reading
Recently, the Office of the Information and Privacy Commissioner for British Columbia published cloud computing guidelines for public bodies in British Columbia. The purpose of the guidelines is to provide information to public bodies about how BC’s Freedom of Information and Protection of Privacy Act (BC FIPPA) applies to cloud computing.
What is Cloud Computing?
Cloud computing is an increasingly popular on-demand service model for IT provision, often based on virtualization and distributed computing technologies. It typically involves the provision of web-based services, such as online file storage and applications, using hardware and software managed by the service provider. For
Recently, the Office of the Superintendent of Financial Institutions (OSFI) released a memorandum reminding federally-regulated financial institutions (FRFIs) that OSFI’s revised Guideline B-10 “Outsourcing of Business Activities, Functions and Processes” applies to new technology-based outsourcing arrangements, including cloud computing.
In the short memorandum, OSFI:
- acknowledged that these new technology-based services may offer opportunities and benefits for FRFIs but cautioned FRFIs that they need to consider and manage the risks associated with the unique features of these services (including issues surrounding location of records.)
- reminded FRFIs that the expectations in the Guideline apply to these services.
The Guideline sets … Continue Reading
The second edition of Canadian Contractual Interpretation Law, by Geoff Hall, has just been published.
The book is the only text focused on contractual interpretation under Canadian common law and the new edition includes commentary on contractual interpretation under Quebec civil law. As such, it is a helpful resource for commercial lawyers who are responsible for drafting contracts; litigators who deal with contractual interpretation disputes; and judges and arbitrators who hear such cases.
The second edition includes a discussion of the new test for the interpretation and application of exclusion clauses set out by the Supreme Court of Canada … Continue Reading
Cloud computing is fast-emerging as an efficient and low cost alternative to more traditional information technology (IT) solutions. It enables a business to outsource its IT requirements to a specialist service provider who can provide required services in a more efficient and cost effective manner and allows a business to focus on its core competencies. However, cloud computing also comes with legal and business risks that need to be managed. Some of the oft-cited issues with this model surround security, confidentiality, performance as well as data location, access and retention.
Due to cloud computing’s borderless and infinite storage potential, vast amount of information can be collected and stored. However, the accumulation of personal information in the cloud increases the risks and impact of unauthorized access to the information, whether through security or data breaches. This risk is compounded when the data is transferred outside of Canada where the information is subjected to the laws of the foreign country.
Storing or Transferring Data Outside of Canada
Where personal information is transferred to a foreign third party, that information is subject to the laws of the foreign country and no contract or … Continue Reading
Business Capabilities Sourcing
Edward Smythe opened the panel with an interesting discussion on the increasing integration of IT outsourcing (ITO) services and business process outsourcing (BPO), which have traditionally been distinct offerings. He explained that the combination of ITO and BPO would form into either:
- a business capability outsourcing service, where the vendor is in charge of supporting
Having previously examined the rationale behind benchmarking, the factors that can undermine its utility and the circumstances in which benchmarking can be used effectively, here are my top ten tips to keep in mind when negotiating a benchmarking clause:
- Benchmarking rights are not a substitute for good due diligence on deal terms, especially pricing. Customers should do their homework to get a reasonable level of comfort that the terms and conditions of their deal will remain sufficiently market competitive over the term. It is important to remember the best way to make sure a deal stays up-to-date is to have
There are differing opinions on the value of negotiating benchmarking rights into an IT services or outsourcing contract. This post will look at the rationale behind benchmarking, the factors that can undermine its utility and the circumstances in which benchmarking can be used effectively. The next post will provide ten tips on negotiating benchmarking clauses.
What is Benchmarking?
A benchmarking is a process through which the competitiveness of a contractual arrangement is assessed, usually by an independent third party, by comparing the arrangement to other comparable deals in the marketplace. The results of the assessment may lead to a binding … Continue Reading
Economic considerations and efficiency gains are forcing companies to reconsider their procurement strategies. Many of our clients who use RFPs or similar procurement processes often ask us whether they should attach a form of agreement or standard terms and conditions when issuing an RFP. There is no set answer to this question, but here are eight things to consider when thinking about whether you should attach “Ts and Cs” to your RFP:
- What are you buying? It is somewhat trite, but the specific services or products being procured, the scope of the project and its importance to your company will
In outsourcing and other commercial services deals, clients often have difficulty preparing the service descriptions and requirements (specifications) to be included in the services agreement (often in schedules or statements of work). This usually results in delays and increased legal costs since we, the lawyers, need to be more involved in the initial drafting process than necessary. We end up spending a lot of time working with client subject matter experts to ensure the service descriptions and requirements are complete, accurate and work from a contractual perspective.
Here are my top 10 drafting tips to help avoid this problem: