THE CONTRACTUAL DOCU- MENTATION The opening session of the afternoon was conducted by Julian Thurston who described the contracts necessary to effect an outsourcing arrangement, in the first instance a detailed agreement is required to regulate the transfer of the IT assets to the FM supplier. It is important to clearly identify the assets concerned so as to ensure compliance with all legal requirements. This contract also contains terms relating to personnel, a limited number of warranties, and provisions for the payment of taxes such as stamp duty and VAT where relevant. The services contract was identified as

being at the heart of the commercial relationship between the user and the FM supplier, since it establishes the standard of service to be rendered. It is essential therefore to specify in great detail what is to be provided, when and how. The services contract also regulates how the FM supplier is to be renumera- ted and sets out liability for perfor- mance.

IMPLEMENTATION A N D M A N A G I N G THE CONTRACT The final presentations were made by Peter Robinson and Graham Nixon. The implementation topic was discussed briefly by Peter Robinson who reinforced

the importance of the services contract. The continuing and interactive nature of FM arrangements were apparent from Graham Nixon's presentation on man- agement of the contract. It is important not only to monitor service levels through various committees and reports, but to coordinate those facilities not handed over to the FM supplier. Con- tinuing dialogue between the parties is necessary to identify opportunities for improvement and development of the relationship.

Julian P Thurston Report Correspondent Partner, McKenna & Co.

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SECOND ANNUAL CONFERENCE ON THE SUPPLY OF COMPUTER SYSTEMS AND SOFTWARE HELD AT CAFE ROYAL LONDON 8 JULY 1991

This conference organized by Henry Stewart Conference Studies was well attended and illustrated the continuing interest and enthusiasm for conferences which deal in a practical manner with the problems which many businesses face in buying and selling computer systems. The conferences was arranged as a real time negotiating session between two teams comprising the seller and the buyer. The seller was represented by Steven Earner of Buxton Douglas & Partners who had as his legal advisor Alistair Kelman of New Court Temple. The Purchaser was Rachel Burnett of Masons who was advised by Christ- opher Rees of Bird & Bird. Professor Sandy Douglas also of Buxton Douglas & Partners sat in magisterial judgement on proceedings as judge, philosopher and friend. The proceedings opened with Rachel Burnett setting out her requirements for the system which was to be the subject of the procurement. Details of the fictitious company which formed the basis of the case study had been circulated to the delegates in advance of the conference and this allowed the conference to get off to a rapid start. Following Rachel's comprehensive list of fourteen issues which were prerequisites for her side of the contract, Christopher Rees as her legal advisor next gave an

address which looked at the nature of the negotiating process and highlighted some areas which would need to be borne in mind throughout the day's proceedings. He broke the list of four- teen down into those which were essential and those which would be 'nice to have'. He also soughtto analyse the anticipated impact of each of these on the other side. He then drew the delegates' attention to the hidden agenda item which had been handed to them with their conference papers that morning. The idea was to demonstrate that people's intentions during negotia- tions are not always made overt and that sometimes it is necessary to seek accommodation of a point without expressly tabling it. Steve Lamer then proceeded to give his view of the contract from the perspec- tive of the supplier which was said to be an international systems house. He stressed the need to agree the functional specification early in the life of the project and to ensure that from the supplier's point of view, they did not get into a fixed price contract for an open ended commitment of what was to be delivered. Professor Douglas had begun the day by likening the seminar to a morality play with attendant heroes and villains. Alistair Ketman in giving his analysis of the contract which he tabled on behalf of the supplier soon estab-

lished himself to the audience's great delight as a highly agreeable villain. The degree of cunning and sleight of hand which was employed in ensuring that the supplier was liable for as little as possible whilst receiving as much credit as possible was marvellous to behold. If the Devil has all the good tunes then Mr Kelman would in this role, be perfectly equipped to act as his organ master! Faced with such venomous opposition our heroes had no option but to resort to underhand tactics themselves and soon battle was joined in earnest. Fearsome struggles were fought over such hardy perennials as acceptance tests, time scales, payment plans, change control procedures and the like. A truce was signed just before lunch when Alistair Kelman lightened his persona from that of Executioner to Inquisitor in giving a lecture on the security aspects of computing. The after lunch session was begun by Christopher Rees who was given the onerous task of keeping his audience awake during a lecture on the riveting subject of warranties, guarantees and limitations of liability. This he just accomplished by the twin strategies of linking his talk to that former star of Tottenham Hotspur Football Club, Mr Paul Gascoigne and also including a slide with the caption 'Sex and Senseless Violence'.

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The afternoon returned to the adversar- ial discussion of the terms of the supplier's contract and battle was re- joined on issues such as warranties, liquidated damages, leasing, insurance and maintenance. Throughout the day, a high degree of audience participation had been evoked and this led to a gratifying level of detail being reached in examination of the various topics dis- cussed. There was even on some areas a measure of agreement reached between the warring parties. The final session of the day was devoted to consideration of post acceptance matters and a discussion on the Intel-

lectual Property Rights which need to be considered in computer contracts and the enforcement of those rights. Alistair Kelman gave a short talk on common causes of litigation on compu- ter matters and Rachel Burnett rounded off the formal part of the conference with her very amusing discourse on the Perfect Client. By this stage the audience were so punch-drunk from the bloodied scenes which had been played out on the platform during the day that they must be assumed to have absorbed all of the lessons which Rachel put over to them. At any rate, this is a consumma- tion devoutly to be wished.

Professor Douglas ended the conference with a summary of the morals which should be drawn from the day. Like all good judgements, his verdict was cap- able of a variety of interpretations and yet not open to appeal. The other protagonists finished this most enjoyable day still on speaking terms, able to shake hands and vowing to return to the fray next year for the next instalment of the continuing saga of Good versus Evil.

Christopher Rees Report Correspon- dent

I N F O R M A T I O N iiiiiiii

DE-MATERIALIZATION AND TAURUS i!iii

The long awaited draft regulations relating to the discussion and negotiations on the consultative paper with iiiiiiiiiiiiiil introduction by The Stock Exchange of Project Taurus The Stock Exchange, companies and other interested ~i~i~i~i (Transfer and Automated Registration of the Uncertificated persons the above-mentioned draft regulations were

i:: Stock) has finally been published by the Department of Trade and Industry.

:::~i~ The project has been welcomed by companies and :~:':~ investors alike in that it dispenses with the need to collect i~ii~iill and transmit share certificates and stock transfer forms in ill the course of transferring securities and provides a system iiiiii!:i for electronically recording and transferring such transfers.

The aim of the project is to provide shorter settlement times i:: and greater efficiency - in that physical certificates or

documents of title are eliminated and such securities exist :: only as computer records with transfer processes reduced

to a book entry activity and with transfer being the legal change of ownership of a security in the records of the

: . .

issuer. This will ultimately lead to cost reductions for all ::iii member participants and for investors.

Under the present law (Section 183 of the Companies Act 1985) unless the transfer is exempt, shares and other

securities in a company cannot be registered unless a :i:::i proper instrument of transfer has been delivered to the : company. In practice, this normally requires a written

document. Substantial changes to the existing law have thus been required to bring Taurus into operation. The

ijilil: Companies Act 1989 which enables the Secretary of State iii iii: to make regulations so that shares and other securities can

be evidenced and transferred without a written instrument. It is important to stress at this point that the practical

:~:: effectof the regulations will not affect the existing rights i:ii:~iii: and obligations between companies and their share- iiii ho de . ili!iii: In July 1990 the Department of Trade and Industry ~ published a consultative paper entitled "Electronic Record-

ing and Transfer of Shares: This outlined the legal and regulatory issues for the project and, after lengthy

published in May 1991. These regulations address issues such as the arrangements by which securities will be held and transferred; and the regulation of the system and its participants, including investigation of complaints and the provision of compensation. The draft regulations provide for a three month consulta- tion period, ending on 16 August 1991, before the final version of the legislation is laid before the Parliamentary Scrutiny Committee in October 1991. This will go to a vote in November 1991 and by December companies will be able to take steps to distribute notices of AGMs in order that the necessary resolutions may be passed on behalf of those who choose to join the system. A deadline of 11 May 1992 has been set for the implementation of the book entry transfer system. Before this, in July 1991 there is an exhibition in the House of Commons and information packs on Taurus will be distributed to all interested listed companies. A copy of the draft legislation and the consultative document entitled "The Uncertified Securities Regulations" referred to above are obtainable from: Mr Bryan Gittens Room 616 Financial Services Division Department of Trade and Industry 10-18 Victoria Street London SWl H ONN Tel: 071-215-3225 Any comments on the regulation should be sent to Mrs J E iilii Humphries, Room 619 at the same address.

Pippa Willbourne, Lovell White Durrant

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