Information and Readiness Disclosure Act
President Clinton recently signed into law the Year 2000 Information and Readiness Disclosure Act (IRDA). The statute's broad purposes are to promote the disclosure and exchange of information related to Year 2000 (often referred to as Y2K) readiness, to assist consumers, businesses, and local governments in responding to Year 2000 problems, and to establish uniform legal principles concerning disclosure and exchange of Year 2000 information.
Although a primary goal of the IRDA is the alleviation of concerns about litigation exposure that have inhibited the free flow of information, the law offers only limited protections. It also does not apply to actual failures that may arise from systems or devices that are unable to handle the change to the Year 2000. Since the IRDA is directed at information exchange between entities, it does not cover statements made to individual consumers in marketing products for personal use.
Even within its intended sphere of coverage, the IRDA's protections are carefully tailored and are limited by exceptions and exclusions. To receive the full measure of the protections afforded by the IRDA, a company should clearly identify its communication of Year 2000 information as a "Year 2000 Readiness Disclosure." To this end, a company is well advised to adopt a policy requiring that all Year 2000 statements be coordinated and disseminated through a centralized point, so that the company speaks with one voice on the subject.
A Year 2000 Readiness Disclosure will not be admissible in court against its maker to prove the accuracy or truth of any statements in it, except where the maker is being sued for repudiating a contract or where the maker's use of the readiness disclosure is in bad faith, fraudulent, or unreasonable. In addition, even if a company's Year 2000 statement is not labeled as a Year 2000 Readiness Disclosure, the IRDA generally shields the company from liability for any allegedly false, inaccurate, or misleading information in the statement.
Since qualifying for protection under the IRDA brings only a limited level of security, companies should consider negotiating protection for themselves in contractual provisions. This may allow for more definite protection that is also more closely tailored to particular businesses. The IRDA does not diminish the ability of parties to enter into such agreements.