In this guest article Scott Shane (who wrote "Fool's Gold? The Truth Behind Angel Investing in America") reviews recent research from the Harvard Business School into the benefits of Business Angel funding for businesses. For a potential or actual Business Angel, it makes for a very interesting read. (Republished by kind permission of American Express Open and Scott Shane).
I am looking for an online accounting package. Xero is highly recommended so, just because I do this sort of thing, I read through the Terms and Conditions. I must be the only non-Xero employee to do this! I am amazed. To my mind it is unconscionably one-sided…
In fact, Xero’s conditions have the following consequences:
- Any error in the software (e.g. wrong arithmetic error, tax calculation, loss of data, etc.) is your problem. Worse than that, it is your responsibility to verify that the software works correctly (that is, you need to make sure it stores the information you give it reliably and calculates all results without error).
- If you breach the agreement, they can remove access to your data. Although they do say the data is yours, it is just that you can’t have access to it.
- Xero have no obligation to maintain your data – Xero expressly says it is up to you to maintain your data and backups (not them).
- If Xero has to close for any reason, you lose all access to your data (there is no right for you to recover your data). Oh, and if you close you (and your accountant, insolvency lawyer, etc.) may lose access to all data.
- If the service does not work as advertised – your problem.
- If Xero is negligent - your problem.
- If Xero has an outage for any reason (e.g. just before tax returns are due in when the load is heaviest) – your problem.
To make this clear, if you lose access to your data then you are entering the arena of disaster recovery. According to Evolven Insights “On average, businesses lose between $84,000 and $108,000 (US) for every hour of IT system downtime.” The numbers for your business will be different and this is *just* about accounts, but how long could you survive without your accounting system? How long would it take to re-key all the data?
If a car was sold with similar conditions, would you buy it? To be comparable, the car would have no warranty and any problems are your sole responsibility. In fact, let’s imagine you were driving your new car home, the wheels fell off and you had a serious accident involving several other vehicles. That would be your problem and liability. To be fair, you might get the cost of the car back as a full and final remedy!
The time for such unconscionable contracts is over. Companies providing services and products should not be able to remove their liability for anything to do with the service or product that they advertise.
Perhaps the regulators are beginning to take notice in Australia. They have to stepped in because individuals are powerless in the face of large corporations. It was reported, on the 18th December 2013, in the Sydney Morning Herald that “The Australian Competition and Consumer Commission (ACCC) found Apple and its suppliers told customers it did not have to provide a refund, repair or replace products with a ‘major failure’, when in fact consumers should have been allowed to choose either a refund or replacement. And that consumers should have been entitled to free repairs, refunds or replacements for products with minor faults.”
Let’s hope the ACCC starts to review all these unconscionable contracts on our behalf and takes action to remedy them.
So back to my problem – which accounting package to choose? Excel is looking quite reasonable at the moment!
The clauses in detail are:
7. LIMITATION OF LIABILITY
7.1 To the maximum extent permitted by law, Xero excludes all liability and responsibility to You (or any other person) in contract, tort (including negligence), or otherwise, for any loss (including loss of information, Data, profits and savings) or damage resulting, directly or indirectly, from any use of, or reliance on, the Service or Website.
7.2 If You suffer loss or damage as a result of Xero's negligence or failure to comply with these Terms, any claim by You against Xero arising from Xero's negligence or failure will be limited in respect of any one incident, or series of connected incidents, to the Access Fees paid by You in the previous 12 months.
7.3 If You are not satisfied with the Service, Your sole and exclusive remedy is to terminate these Terms in accordance with Clause 8.
4. Breach: If You:
a. breach any of these Terms (including, without limitation, by non-payment of any Access Fees) and do not remedy the breach within 14 days after receiving notice of the breach if the breach is capable of being remedied;
b. breach any of these Terms and the breach is not capable of being remedied (which includes (without limitation) any breach of clause 3.4 or any payment of Access Fees that are more than 30 days overdue); or
c. You or Your business become insolvent or Your business goes into liquidation or has a receiver or manager appointed of any of its assets or if You become insolvent, or make any arrangement with Your creditors, or become subject to any similar insolvency event in any jurisdiction,
Xero may take any or all of the following actions, at its sole discretion:
d. Terminate this Agreement and Your use of the Services and the Website;
e. Suspend for any definite or indefinite period of time, Your use of the Services and the Website;
f. Suspend or terminate access to all or any Data.
5.3 Backup of Data: You must maintain copies of all Data inputted into the Service. Xero adheres to its best practice policies and procedures to prevent data loss, including a daily system data back-up regime, but does not make any guarantees that there will be no loss of Data. Xero expressly excludes liability for any loss of Data no matter how caused.
6.3 No warranties: Xero gives no warranty about the Services. Without limiting the foregoing, Xero does not warrant that the Services will meet Your requirements or that it will be suitable for any particular purpose. To avoid doubt, all implied conditions or warranties are excluded in so far as is permitted by law, including (without limitation) warranties of merchantability, fitness for purpose, title and non-infringement.