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UK Court Finds Company Liable For Software Defects 205

Posted by samzenpus
from the lemon-law dept.
normsky writes "A software company's stipulation that it couldn't be held accountable for the poor performance of its software was unfair and could not be enforced, the High Court has said. 'Pursuant to the Sale of Goods Act 1979, a term is to be implied into the contract that Entirety would be fit for the purpose for which it was bought, namely that the system would increase revenue and occupancy levels and would allow quicker check-in and check-out, including accurately processing groups and making changes to group reservations while preserving the accuracy of the system. I am satisfied that Entirety was not fit for the purpose for which it was sold,' his Honor Judge Toulmin wrote."
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UK Court Finds Company Liable For Software Defects

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  • by Anonymous Coward on Thursday May 13, 2010 @02:22AM (#32190110)

    Great news - and am happy this is being done. Maybe if this is held as a precedent, more software will be written sensibly and with fewer stupid bugs and features.

    I think it is unforgivable that software companies can provide us any software they want (esp. in enterprise software) and get off without any problems. All this is due to very little attention paid to during the SDLC to thinking of problems and use cases and testing.

    Yay good for UK - and hope developers in US also get their feet held to the fire soon!

    • Re: (Score:3, Insightful)

      by zonky (1153039)
      This is about how software is sold and marketed, not how it is written.
    • by zonky (1153039)
      Not only does the UK acts say it has to be fit for purpose, but also that it should be durable for what a reasonable person would consider reasonable. That should mean that patching for security etc, should be available for a reasonable period as a right.
      • Re: (Score:3, Insightful)

        by Neil_Brown (1568845)

        That should mean that patching for security etc, should be available for a reasonable period as a right.

        Or that the product should be secure against vulnerabilities known to be prevalent at the time at which the software was sold. I would not read it as implying an ongoing duty to provide patches against unknown threats.

        There might be more of a debate about threats which, whilst known at the time of sale, were purely theoretical, with no realistic prospect of being a real vulnerability, but which, so

    • Yay, higher prices for software. What, you expected a lower bug rate without any added cost? At least now you won't have the option to buy software of current quality at a discount; you'll only be able to get the finest (at a higher price).
      • by delinear (991444) on Thursday May 13, 2010 @04:17AM (#32190580)

        Yay, higher prices for software. What, you expected a lower bug rate without any added cost? At least now you won't have the option to buy software of current quality at a discount; you'll only be able to get the finest (at a higher price).

        Of course you'll have the option to buy lower quality software at a discount price, all that will change is that the sales guy can no longer lie and tell you that it's actually high quality software at a discount price. If you're happy to buy buggy software and pay less for it then he shouldn't need to mislead you in the first place, and if this market exists then the people writing buggy software will continue to do so - for many people "good enough" is worth the discount.

      • by schon (31600)

        Yay, higher prices for software.

        Because software vendors don't know how to calculate demand-curve pricing right now, and this will give them incentive to learn?

        You seem to be under the mistaken impression that software companies aren't already pricing their software at the maximal rate of return.

    • Re: (Score:3, Interesting)

      by Z00L00K (682162)

      On a note - whoever classed parent as "Troll" must be the real troll.

      Anyway - for some reason we have been living through an era of too many years where accountability for defects in a product never have been applied to software, only on most other products around us.

      Today there are tools available for ensuring code quality (functional quality, not cosmetic quality) - like FindBugs [sourceforge.net], so there is no excuse except the weak excuse of pressed time schedules, which often is caused by improper time management in t

      • What you say is all very true, but the problem is that we don't have engineers in software. And that doesn't just mean the title, it means the laws that require a software product to have been vetted by an engineer.

        If I build something, I must have my drawings vetted. The government won't allow me to start construction until someone has signed of on it. And this means that the law ensures that highly paid engineers are responsible for quality.

        In software development, a lot is done by a 18 yr old who works

    • Frankly, the more "enterprise" the software is, the less pity I have for the customer(and yes, I have dealt with some pretty ghastly "enterprise" software, this isn't just theoretical sniping from the outside).

      If Joe Consumer buys a shiny box-o-shrinkwrap, he basically has zero power. Most stores won't do anything more than replacement-in-kind, for physical defects in the medium or accompanying accessories, no returns. The inevitable nasty EULA will be hiding inside the shrinkwrap that confirms your acce
    • His Honour Judge Toulmin also said that the software was not up to the tasks that Kingsway needed to use it for, and which Red Sky should have known were part of Kingsway's needs when buying the product.

      This isn't bugs, this is the software doesn't have the features claimed. You get a product demo and think it's going to be awesome, install it, and then find out it doesn't do what you need it to do. Think SAP. I'd bet if you have a horribly unusable interface but it is sufficiently documented so you can

  • by Neil_Brown (1568845) on Thursday May 13, 2010 @02:22AM (#32190116) Homepage

    Although, in this case, despite being a business, the recipient / purchaser was treated as a consumer, given the one-sided nature of the negotiations in respect of the clause in question. (I.e. doing business on the other side's standard terms.)

    Similarly, had there been sufficient opportuntiy for the purchaser to test the product, rather than relying on a demonstration by the vendor, the outcome may have been different; as, potentially, would have been the case in which the vendor had pointed out that the software had particular known problems / lack of support in certain areas.

  • by Anonymous Coward on Thursday May 13, 2010 @02:28AM (#32190140)

    Mr. Ballmer woke up in a sweat in the middle of the night, not knowing exactly why...

  • it's about time (Score:3, Interesting)

    by Anonymous Coward on Thursday May 13, 2010 @02:48AM (#32190236)

    On the one hand, I hate the idea of my industry being flooded with lawsuits; along with software patents, it's just one more nail in the coffin of small scale software entreprenuership.

    On the other hand, those "we're not responsible no matter what goes wrong and how much damage it did" EULA's are holdovers from the 80's, when personal computers were experimental toys, and software was mostly games. No other consumer product I know of comes with a contract you have to sign which basically stipulates that the vendor takes no responsibility for the quality of the product at all. "If this software goes haywire and blows away your financial records - well, hope you had backups, and a bunch of time to recover them, because we didn't have time to test it, sorry". Imagine if a car or a washing machine came with an agreement like that - "if this thing shorts out and burns your house down due to a design flaw, it's your problem, luser, you should have installed sprinklers". That's bullshit.

    Software is a real product in which people now invest large amounts of time and trust. It's time for the industry to grow up and take legal responsibility for its products. So much for "good enough" software - and as a user, I say good riddance, too.

    • Re:it's about time (Score:5, Informative)

      by Chris Newton (1711450) on Thursday May 13, 2010 @04:06AM (#32190552)

      Imagine if a car or a washing machine came with an agreement like that

      I had a hybrid version: an automated car wash at a petrol station did serious damage to my car after it collided with it.

      The immediate reaction from the staff on site was to deny everything, point at some weasel words on a sign full of disclaimers, and claim that my car wasn't suitable for their machine (even though they could see it when they sold me the token to put in the machine, and it had been through the same machine without incident on several previous occasions).

      However, when it reached their central "customer care" people at head office, they immediately arranged to pay out a substantial sum of money to cover the cost of repairs on a reasonable basis (asked me to provide two quotes from reputable local repair shops).

      I later discovered that there had previously been at least one similar case that had gone to court, where the car wash operators pretty much got torn a new one. I imagine the "customer care" people were aware of this, or at least their legal team was.

      So much for "good enough" software

      On the contrary, it seems this ruling says precisely that software must be good enough. Unless there's something in the actual ruling that is completely missing from TFA, this doesn't require all sold software to be perfect or bug-free, just that it be fit for purpose and of merchantable quality.

      That probably means that the more you pay for software and the more the advertising promises, the better the quality and functionality would need to be. A cute graphics demo that cost £1 on an app store for your mobile phone would not be expected to do the same things and with the same reliability as medical device control software you sold to a hospital at £100,000 per unit.

    • by delinear (991444)
      Honestly, all that's needed is more transparency. There are times when I'm happy to buy something cheap and buggy because it's not mission critical and it saves a lot of money, there are other times when I need iron cast guarantees about the quality of the software. The fact that some vendors artificially inflate the claims of what their software can do is harmful to the industry as a whole - it devalues the better software which is forced to try and compete on an uneven playing field, it gives consumers th
  • This case isn't really atypical of the UK and the EU. Being an American ex-pat who works and lives in the UK, I am always amazed to see how many US companies don't understand the implied warranty and fitness for purpose concepts in UK and EU law. The terms of service of a lot of software don't mean anything, it truly is about if the seller and the consumer are fair and equitable with each other and it is very hard for the seller to be able to constrain the rights of the consumer. Take for example BSkyB for EDS where the contract cap was broken because EDS was deceitful in the sales process about the timelines it would take to implement a solution.

  • by FuckingNickName (1362625) on Thursday May 13, 2010 @03:26AM (#32190376) Journal

    In America, the buyer must beware: there's this weird idea that it's OK to con someone, because they should somehow know that the person they're buying from isn't trustworthy, essentially throwing all "perfectly informed and rational consumer" theories out of the water. Western European countries tend to have the different opinion that you don't get to fool someone any time (unless you're a civil servant or banker). Sales of most goods are very much not final - for example, the Distance Selling Regulations stipulate a trial period for many goods bought online. So:

    1. Do you feel your software is of good quality?
    If YES, go to 2.
    If NO, give away or do not distribute.

    2. Are you prepared to fix any serious problems with your software found by your customers in the year after you've sold it?
    If YES, go to 3.
    If NO, give away or do not distribute.

    3. Do you want to make money from others on the basis of honest trade?
    If YES, go to 4.
    If NO, give away or do not distribute.

    4. Are you prepared to accept that for a consumer to be properly informed about a complex product, he must have a trial period?
    If YES, go to 5.
    If NO, give away or do not distribute.

    5. Congratulations, you're not a shyster and are the sort of businessman an economy needs.

  • by new500 (128819) on Thursday May 13, 2010 @04:03AM (#32190538)

    They are most informative, for those above crying about imaginary worries that this decision causes liability which did not exist before for free / OSS developers. It doesn't make even things harder for commercial developers, provided they're not a bunch of conniving idiots.

    Here's the crux, on which the claim relies and the defense fails . .

    in para 66 Toulmin finds: "*Red Sky's advertising materials for Entirety make specific claims for Entirety*. They include, among its other advantages, that Entirety "dramatically increases revenue and occupancy levels, allows quicker check in and check out service to paying guests. "This is the essence of the service Red Sky was claiming to provide for Kingsway. "

    But the real fun is to read how Red Sky's case collapsed . .

    some choice quotes from the findings, no particular oder, edited for brevity:

    "Mr Benson was ill prepared when he came to give evidence. . . He said in his CV that he had been employed for seven years immediately preceeding his employment at Kingsway. This turned out to be untrue. . . His witness statements gave the impression that he was responsible for IT contracts . . In oral evidence he had to admit that, on the contrary, he was employed by Ramesys as a technical installer . ."

    "Mr Edwards was at all material times the Managing Director of Red Sky. He said in oral evidence that he understood the business side but not the actual detail as to how the software was used. "

    "Ms Howard found herself in the uncomfortable position of having to defend the Action on behalf of her superiors . . " (they left it to their junior to defend the court proceedings against them! Wow!)

    "Reverting to Ms Howard, there appeared to be times when she was covering loyally for the inadequacies of Mr Frost, to whom she reported, and others at Red Sky. Her witness statements contained important and glaring inaccuracies."

    so in summary, the vendor lied outragously both about their product capability (not thinking to find some choice disclaimer either in their ad - copy nor in other material representations to the original sale which might have gotten them off the hook) and stumbled into court still telling a pack of lies.

    FOR THOSE NOT CONVINCED THAT THIS IS OTHER THAN BUSINESS AS USUAL, PLEASE SHOW ME WHERE IN TFF (the f findings of fact)THERE IS A INTERPRETATION OF LAW AS TO THE EXTENT OF WARRANTY WHICH REVISISE PREVIOUS LAW???!!!

    Frankly, it's just an silly workaday case, short in findings, and frankly rather fun to read.

    Says plenty about the journalists who highlighted this that they could write more words than obviously they cared to scan - read even from the source.

    As to the case itself, meh, nothing to see here, but gotta feel sorry for Ms Howard.

    Or very very happy if you're her employment attorney, depending how you look at it . .

  • Sounds like (Score:4, Interesting)

    by zero0ne (1309517) on Thursday May 13, 2010 @04:45AM (#32190692) Journal

    The perfect law to use when going after all the fake AV software companies.

  • Bad headline (Score:5, Informative)

    by jazman (9111) on Thursday May 13, 2010 @04:52AM (#32190708)

    I read this on the Register yesterday. The /. headline is wrong. The court *didn't* find the company liable for software defects, they found them liable for misselling the product; the customer relied on the claims made by the company and those claims were wrong. The software was not capable of doing the job the customer needed, but the company claimed that it was.

    • Seriously. This is quite basic, and common to all sorts of goods. In the US, any state that uses the Uniform Commercial Code (which is almost all of them) has something similar. Basically any good sold must be guaranteed to be fit for the purpose that it is sold. Thus if you sell a battery, and that battery is advertised as being able to produce a certain voltage to power devices, it has to do so. If you sell a dead battery, a customer can return it for a refund as the battery wasn't fit for the purpose it

  • Please be aware that there is a difference between "free of bugs" and "useable for the intended purpose". This verdict is not new. If you sell a software for purpose "X" and afterwards it turns out that "X" cannot be reached due to limitations, you were always liable (at least here in germany). But several courts have ruled, that no complex software is 100% bug free. There are and will always be bugs. But the software must still be useable for the intended purpose.

    CU, Martin

  • by crimperman (225941) on Thursday May 13, 2010 @04:54AM (#32190722) Homepage

    This is not the horror story which the headline and TFS seem to imply. The key points are:

    * The software company (Red Sky) sold the software without letting the customer (Kingsway) try it or read any operating documents
    * Kingsway thus bought it based *solely* on the sales advice of Red Sky
    * When the software failed to live up Red Sky's promise, Kingsway tried to get their money back
    * Red Sky tried to rely on a clause in its standard T&C which said that the only remedy available to customers was to make use of its maintenance and support functions. Thus it said that Kingsway could not sue it for a refund
    * The High Court disagreed and said that Red Sky's clause was unfair under the Unfair Contract Terms Act. It said that this Act applied and protected Kingsway because negotiations between the companies had been one-sided on the issue of liability

    From TFA:

    "Red Sky's' standard terms were predicated on the fact that a prospective customer would investigate Entirety [the software] and make up its own mind whether or not to purchase based on demonstrations and the Operating Documents which Red Sky had previously supplied," said the ruling. "It did not apply to circumstances in which the customer relied on Red Sky's' advice in deciding to purchase Entirety"

    In brief: If you are going to make promises about your unseen and untested product, you cannot prohibit the customer from getting a refund if it turns out you misled/misinformed them.

    Seems fair to me and it has no real issues for software vendors or OSS people unless they also allow their sales people to make promises that the development team cannot support

  • ..Microsoft expected to pull out of the UK within days..

  • by Geeky (90998) on Thursday May 13, 2010 @06:08AM (#32191118)

    You learn something new every day - I remember being taught that the Sale of Goods Act applied only to purchases made by consumers - i.e. that it was purely consumer protection legislation. Business to business sales were not covered (usual breach of contract litigation would, of course, still be possible).

    Just googled it, and it does appear that I was taught wrong - it does apply to business purchases.

  • Hey guys! Don't sell more than we can provide!

A language that doesn't have everything is actually easier to program in than some that do. -- Dennis M. Ritchie

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