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In the current five-year plan (1991-1995), China plans to place greatest efforts on developing infrastructure, particularly thermoelectric and hydropower installations, new railway systems, large deep-sea ports, a national phone network, and food processing and chemical plants. Local governments also have their own blue prints for local construction besides the central government integrative plan. For example, Guangxi province has 24 new and rebuilt major projects in 1992. The projects are mainly in the energy, transportation, and raw material industries, representing a total investment of RMB 2.7 billion. These plans will create greater demand for imports of machinery, equipment, raw. | ARTICLE SOFTWARE PRODUCT LIABILITY UNDERSTANDING AND MINIMIZING THE RISKS By Lawrence B. Levyĩ and Suzanne Y. BelT table of Contents I. The Problem of Vendor Liability 1 II. Theories of Liability 2 A. Threshold Issue Is Software a Good or a Service 2 B. Contract Theories of Liability 7 C. Tort Theories of Liability 8 III. Minimizing the Risks 15 A. Contractual Provisions 15 B. Development and Marketing Strategies 23 C. Relationship With Licensees 26 D. Product Liability Insurance 27 IV. Conclusion 27 I. The Problem of Vendor Liability As computer technology evolves more powerful computer systems and software are available to more individual users and businesses.1 As a result software vendors are likely to face increasing exposure to lawsuits alleging that software did not perform as expected. The consequences of such lawsuits to software vendors could be catastrophic. Several examples illustrate the extent of the potential liability faced by software vendors. In one case an error bug in a computerized therapeutic radiation machine caused it to administer incorrect dosages. Two people were killed and several others were seriously injured.2 In another case a construction company alleged that a bug in a spreadsheet program caused the company to underbid a 3 million contract. The company sued the manufacturer of the program for 245 000 claiming it had lost that amount as a result of the incorrect bid.3 Finally in Scott v. White Trucks 4 the defendant s truck was equipped with computer- controlled anti-lock brakes. After the brakes failed and the truck crashed the driver of the truck brought a product liability action alleging defects in the software.5 Few software product liability cases have been litigated so little directly applicable judicial guidance is available to pinpoint steps a software vendor should take to minimize liability. However by understanding the legal theories upon which a hypothetical plaintiff may rely in a suit against a software vendor it is .
