Software vendor contractual liability

A software vendor's contractual liability is the liability it bears toward its client for defective software, a missed delivery or an outage of a service it runs. It falls under tech E&O (errors and omissions), not under the cyber policy. On May 29, 1998, Faurecia signed license, maintenance and training contracts with Oracle for an integrated enterprise software package. Its V12 version, announced for September 1999 at the earliest, was to equip Faurecia's sites. It was never delivered, and litigation broke out over payment and damages. The contract's clause capped compensation at the price paid. On February 13, 2007 (no. 05-17.407), the commercial chamber of the French Cour de cassation held that the vendor's breach of an essential obligation was enough to defeat the clause. On June 29, 2010 (no. 09-11.841), the same chamber narrowed the rule. The clause is deemed unwritten only if it empties the essential obligation of its substance, which this cap did not do. Gross negligence turns on how serious the debtor's conduct was; breach of an essential obligation alone does not establish it. A vendor's typical dispute with its client looks like this one: software that does not do what the contract promised, acceptance testing that never passes, or an outage of a service it runs. Those claims go through tech E&O, which covers fault in performing the service. It covers that fault to the extent of the vendor's liability at law, subject to the exclusion of contractual commitments assumed beyond that. The cyber policy does not respond. It covers breaches of system security and data (notification, extortion, liability arising from a leak). It usually excludes assumed contractual liability, as well as the product's failure to perform. A vendor that bought only cyber often discovers that boundary the day a client disputes a failed acceptance.