In making a sales pitch, it’s not uncommon for a software vendor to put together a non-working demo or mock-up of what the customer might see in the final, customized software implementation.
Such demos can be great sales aids. But they can also give rise to fraud allegations if the customer later claims, "you never told us it was just a demo!"
Strange as it may sound, this does happen in real life; when tech projects blow up, customers’ lawyers almost always look for opportunities to make fraud claims against the vendor. As Chris Kanaracus reported in 2008 about the recently-settled Waste Management, Inc., vs. SAP lawsuit:
"At that meeting, SAP AG executives and engineers represented that the software was a mature solution and conducted a demonstration consisting of what they represented was the actual SAP Waste and Recycling software," the complaint states.
The company later discovered [sic] that the software was a "mock-up version of that software intended to deceive Waste Management," according to the complaint.
SAP has admitted to this in "internal documents," the complaint states.
SAP also demonstrated the "fake software" at subsequent sales presentations, according to the complaint.
[Emphasis and extra paragraphing added.]
If you’re a vendor, you can easily give your lawyers ammunition to shoot down this particular type of fraud allegation: Clearly label every screen of your demo as such.
The label could read something like this, in a footer: Note: Some significant features shown in this demo are not currently implemented.
That kind of label could help dissuade the customer from making a fraud claim at all, or perhaps allow the vendor to move for summary judgment dismissing the claim without a trial.
- Why the fraud claim is the lawyer’s weapon of choice in lawsuits over failed technology projects
- Why tech vendors should consider providing a written risk-factors disclosure sheet
- Vendors, consider a no-reliance clause for your sales contracts, to help forestall claims of fraudulent misrepresentation