The answer is “yes” … and in a big, potentially unpleasant way. To find out how and why, let’s take a trip back to 19th Century England and Hadley’s Mill.
Once upon a time …
Hadley was doing quite well with his milling enterprise, happily milling away when suddenly, an important part broke, making it impossible for Hadley to mill anymore. In an attempt to minimize the impact of downtime, Hadley contacted Baxendale to take the broken part to have it fixed and bring it back to him again. Baxendale went off with the part, agreeing to have it fixed and back by the next day. By the end of the next day, Hadley had seen neither Baxendale nor the new part. Meanwhile, his business was losing money. When Baxendale (and the part) finally appeared five days late, Hadley wasn’t pleased. In fact, he took Baxendale to court in an effort to recoup some of the sales he had lost.
The ruling behind the win.
As part of its ruling for Hadley, the court set the basis for what can constitute a breach of contract in these types of situations. The court decided that:
- The injured party may recover damages for loss that would be considered as common to usual course dealings for this type of contract.
- The concept of ‘consequential’ damages, i.e., lost profits, can also be considered as long as they are foreseeable if the terms of the contract are not fulfilled
- Deciding what is “foreseeable and what is not can be done by examining the common practices of a specific trade, as well as by considering other relevant sources
In reaching these conclusions, the court established a precedent that still applies today – nearly two centuries later.
The ruling and its impact on you.
Back in the 19th Century, Hadley’s problem had to do with a part that was critical to his mill’s operations. Today, the problem would probably be something that caused unplanned downtime in an enterprise’s IT environment. That’s because the number of business critical applications has multiplied significantly as businesses rely more and more on IT for almost everything they do. And while it was Hadley that sued Baxendale, Hadley’s customers could have just as easily sued him if he had been contractually obligated to deliver products to them. If that had been the case, Hadley probably would have lost as well.
The conclusion is clear. You are obligated to deliver a product or service and can be held liable for not doing so.
No downtime. No suit.
Avoiding this type of liability is simple: eliminate all IT downtime from your operations. However, achieving this “downtime-less” state can be complicated. Disaster Recovery plans and break/fix services help minimize downtime when problems occur. But is there really a way to keep most unplanned downtime from happening in the first place? The quick answer is “yes,” with proactive services available from HP and Avnet. I’ll discuss what proactive services can do in greater detail in future blogs.