Legal Question in Business Law in New York
Our company uses a third party, Host Co., to host our website. Host Co., we only just learned, used Amazon's Cloud to host many of the websites for Host Co.'s clients. Our site was down for more than two days as a result of Amazon being down last week. Our SLA with Host Co. provides for certain uptime requirements and for certain penalties if they do not meet those requirements. Those penalties would be substantial given the downtime last week. My question is, can Host Co. liability under the SLA by resorting to the MSA's force majeure clause, which states that inability to perform will be excused if due to fire, strike, etc. "or any other reason where failure to perform is beyond the reasonable control of and is not caused by the negligence of the non-performing party"? I would not think a party primarily responsible for performing could absolve itself of responsibility simply by outsourcing some of their duties to a third party and then claiming under a FM clause that they aren't responsible when the third party fails to perform. Thanks for any thoughts.
2 Answers from Attorneys
Pending more understanding as to the source of the outage it may not be possible to tell.
If, as has been suggested, there was an external hack/attack that caused the outage(s), the question will be whether that was foreseeable and whether the defenses against such an attack were reasonable under the circumstances. Simply outsourcing responsibilities to a third party, however, is insufficient to avoid liability for negligence.
As a Franchise Attorney I agree with the other attorney answer. Was the proximate cause of being down (external hack or attack) forseeable; has it happened in the past so it's predicable, etc? Was the action taken reasonable and sufficient, given the answers to the previous questions? Consult with a good business or franchise attorney in your area for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Foundations, a Professional Corporation
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