The recent onset of Ebola in Dallas, Texas, initially blamed on poorly designed electronic health record software, highlights the need for carefully drafted software development agreements.
When the case was diagnosed, media outlets initially reported that a software glitch may have prevented the E.R. doctors from viewing the entire medical history of the patient, including the fact that the patient had recently been to Ebola-stricken Liberia. According to the media, had the E.R. doctors seen that information, they may have acted differently during the patient’s first visit to the hospital.
Even though the hospital later rectified that the software did not malfunction, there are important lessons left behind for software developers and customers alike: Software development agreements must be carefully drafted, ensuring that the duties and responsibilities of both parties to the contract are clearly defined. Below I discuss some of the key clauses that must be carefully considered when drafting a software development agreement.
The parties should clearly specify the purpose of the agreement. For instance, an agreement to design, develop, produce and install software is very different from an agreement to simply develop software that can perform specific functions. Generic words that describe the purpose leave room for confusion and misunderstanding between the parties.
Likewise, the agreement should specify technical requirements, such as the medium and hardware to be used, the functions that the software will perform, the type of code language to be used, and the number of programs to be developed, among other details. The parties should also be clear about the type of printed documentation expected from the developer, including use and troubleshoot manuals.
The agreement must very clearly specify which warranties are given and which are disclaimed, and if any are disclaimed, the disclaimer must be carefully drafted to meet all warranty disclaimer requirements. Warranty and limit of liability clauses are extremely important, yet often overlooked by practitioners and developers alike.
The Dallas Ebola case helps illustrate the importance of these clauses. It is likely that the hospital and the developer would be having a warranty and liability conversation soon if the cause of the delayed diagnosis was truly software malfunction. The conversation would likely include some of these questions: Who is responsible for the alleged glitch? Is it the hospital, the developer or a third party? What was the developer’s exact job, and was it done properly and accurately? Did the developer warrant that the glitch would not occur or were warranties disclaimed? Is the liability of the developer capped in the contract? Was the glitch actually a design problem not previously identified, and if so, was the developer the designer, too? The answers to these questions should be in the agreement.
The importance of a properly drafted software development agreement cannot be understated. Whether the agreement involves a multi-million dollar project or not, the loss resulting from software glitches can have catastrophic social and economic consequences. Thus, software developers and their clients should consult with counsel prior to finalizing a software development deal to make sure they are properly protected.
The author wishes to make clear that, as reported, there was no actual software glitch in the hospital’s software.
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