Reviewing Outsourcing And Technology Arrangements In Uncertain Times

Originally appeared in the June 19, 2009 issue of The Lawyers Weekly.

There is no doubt that vendors of software and technology services will be adversely affected by the current global financial crisis. As their clients suffer or disappear, so too will many vendors. For companies that have outsourced key functions, the collapse or instability of a vendor can be catastrophic.

Even software licences are at risk. Many companies are surprised to learn that if a software licensor declares bankruptcy or goes insolvent, the licensor's trustee can disclaim (effectively terminating) the software licence with no recourse. To deal with this, changes to Canadian law have been enacted, but not yet proclaimed into force, to soften the effects of such disclaimers – but only to a limited extent.