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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 @03:22AM (#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!

  • by Anonymous Coward on Thursday May 13, 2010 @03:23AM (#32190128)

    Yes, and every hobbyist now has to worry about being sued when their code breaks.

    There's two sides to this. One is ripe for abuse.

  • by Sique (173459) on Thursday May 13, 2010 @03:30AM (#32190152) Homepage

    Then the hobbyist should stop claiming his software was fit for a certain purpose.

  • by zonky (1153039) on Thursday May 13, 2010 @03:32AM (#32190162)
    This is about how software is sold and marketed, not how it is written.
  • Re:What about OSS (Score:5, Insightful)

    by zonky (1153039) on Thursday May 13, 2010 @03:37AM (#32190194)
    Er, the whole point is you can't assign away any responsibilities if you've sold it at all. It must be fit for purpose.
  • Re:Implications! (Score:5, Insightful)

    by QuantumG (50515) * <qg@biodome.org> on Thursday May 13, 2010 @03:40AM (#32190204) Homepage Journal

    What part of the word "sale" do you not understand?

  • Re:What about OSS (Score:5, Insightful)

    by Tapewolf (1639955) on Thursday May 13, 2010 @03:40AM (#32190206)

    While it might be good to hold commercial companies responsible for the software they sell it can place OSS developers in a very bad situation.

    If you sell your software to someone using only a rigged demo to convince them, then yes - you'd be liable if it wasn't able to do in reality what it seemed to do in the demo. With OSS - and heck, many commercial apps - you can usually evaluate it first, in which case this law would not apply. AFAIK it was the fact that they weren't able to evaluate it properly which caused the problem.

  • Re:Implications! (Score:2, Insightful)

    by KDR_11k (778916) on Thursday May 13, 2010 @03:42AM (#32190208)

    I think it's fine, if you sell software that doesn't do what you advertise it to do you should be held accountable. After all you can't sell someone a physical product that doesn't do what's advertised so why should software get special treatment here?

  • Re:What about OSS (Score:3, Insightful)

    by mjwx (966435) on Thursday May 13, 2010 @03:45AM (#32190220)

    While it might be good to hold commercial companies responsible for the software they sell it can place OSS developers in a very bad situation.

    Just make software the same as all other goods. If not fit for purpose I can return it for full purchase price, when that purchase price is zero, I can return it for that amount. Software companies want the boon of both product and contract sales but are not willing to accept the disadvantages of either, with a product I can return it if defective, with a contract I can sue if the product does not meet requirements while neither apply to software. This one sided arrangement needs to be fixed.

    By the same token if someone uses their Toyota Hilux to run over me, I cannot sue Toyota because their product was misused. Current laws that govern sales protect manufactures/producers against what you are concerned about, companies aren't sued if their product is found to be defective, they are withdrawn from sale. Companies are only sued if they knowingly released a defective or dangerous product.

  • Hobbyist?

    Microsoft is far more likely to be crapping bricks than any freeware author.

  • by bloodhawk (813939) on Thursday May 13, 2010 @03:54AM (#32190264)
    The BSOD is in fact a feature, sorry I know what your getting at but the BSOD is in fact the Kernels Diagnostics dumping ability providing information about an error that has occured, anything from hardware failure to drivers or OS bug.
  • Not really... (Score:5, Insightful)

    by Joce640k (829181) on Thursday May 13, 2010 @04:02AM (#32190284) Homepage

    If you'll bother to read the article (yes, I know...) you'll see that the customer was only given a demonstration of the software by a sales rep and the sales contract said "no money back".

    If your software has a free trial period and/or you allow refunds then you're OK - people can try before they buy.

  • by Dumnezeu (1673634) on Thursday May 13, 2010 @04:12AM (#32190320)

    This case is not about accidental bugs, but about intentional ones. I would gladly like to be able to sue a company that slipped a trojan in their application without clearly informing me about it; or one that promises to give me something and instead it only gives me a mock-up or even nothing at all; or one that sells me software that was intended to stop working a year after the purchase without clearly informing me about it. What does this have to do with hobbyists, I do not know... RedSky was sued for fraud (false advertisement) and their application was breaking all the time - it wasn't just a few accidental bugs, it was a complete lack of interest in providing the customer with a functional product.

  • by Anonymous Coward on Thursday May 13, 2010 @04:20AM (#32190350)

    On th other hand, many free software projects, despite being perfectly usable, often don't actually leave alpha. I think a lot of this has to do with claims made about the software from the manufacturer. If you're clear that it's a work in progress, etc. I think you're in the clear.

  • by shaitand (626655) on Thursday May 13, 2010 @04:20AM (#32190356) Journal

    The last time I heard of Microsoft being sued they settled by giving 20 mil worth of software coupons to schools. This was their punishment for being an abusive monopoly, they were forced to engage in a marketing campaign.

    I don't see Microsoft crapping bricks anytime soon.

  • by FuckingNickName (1362625) on Thursday May 13, 2010 @04:26AM (#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 delinear (991444) on Thursday May 13, 2010 @04:39AM (#32190430)
    AC has hit the nail on the head - there's a reason that, for instance, a company might choose to pay MS a lot of money to use Bing maps in preference to the free solution from Google, and that reason is that they have a legally binding contract which includes accountability on both sides. If you're dealing with an alpha version of the code which is expected to have bugs and comes with no guarantee, that's fine so long as that's reasonably conveyed to the customer and they're happy to take the risk. If you tell the customer you're providing a mature solution that will do X, Y and Z and you're charging a premium for that, it's only right that the software vendors are accountable if it fails on any of those stated counts. If you're worried about getting sued, make it blatantly clear that there are potential flaws in the software - if that makes it harder to sell then either reduce the price or fix the flaws.
  • by the_womble (580291) on Thursday May 13, 2010 @04:43AM (#32190456) Homepage Journal

    What laws not contingent on a sale having occurred? Negligence and other torts? Not likely: there is no case law suggesting that, and it is a completely different situation so this case has no bearing on it.

    What happened here was:

    1) There was a sale of goods, and therefore an implied contract term that the goods were fit for purpose.
    2) The exclusion clause relied on the customer having been supplied with documentation before purchase that they never received.
    3) As a result of 2), the customer relied on the suppliers descriptions of what the software could do.

    In the case of hobbyist software
    1) there is no sale of goods and no contract (an open source license is not a contract)
    2) There are no conditions on disclaimers of liability
    3) There is no salesman making unrealistic promises to the customer.

  • by Neil_Brown (1568845) on Thursday May 13, 2010 @04:47AM (#32190468) Homepage

    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, some point after the sale, became exploitable in the real world. However, in this case, I'd expect a court to take a position of what is reasonable, and to consider that a possible, but, highly unlikely, threat, was not a defect, unless the product was sold as being "secure against all known threats", or the like.

  • by delinear (991444) on Thursday May 13, 2010 @04:51AM (#32190488)
    Arguably, even if you charged a fee for the use of your software, the disclaimer that it might or might not work could be enough to protect you - there is no implied fitness for purpose under the Act, it has to come from a specific claim, so unless you're making claims about the exact benefits of using your software, as a hobbyist you should be fine. As a business, selling a bespoke piece of software, you'll probably be bound by specific contract terms regarding a failure to deliver, so this only really applies to companies selling off the shelf solutions with wild claims that they can't meet, and in that case it's got to be a good thing for everyone.
  • by blane.bramble (133160) on Thursday May 13, 2010 @05:08AM (#32190556) Homepage
    No, but I work in IT and know how to ensure that I am not being misled. Now look at it the other way round, you call a hotel to book a room, they tell you it will be 5 star, have a TV, en-suite, king size bed, etc. etc. Now when you get to the hotel to use the facility, it's nothing like you were told - is it your fault for not checking (in person) that the room is suitable *before you turn up to use it*?
  • by delinear (991444) on Thursday May 13, 2010 @05:15AM (#32190576)
    Of course, because it's so difficult to confuse the layman with technical jargon - the layman always being so technically astute. Come on, there are dozens of ways in which the salesman could have spun a bad demonstration to alleviate the worries of the customer - maybe telling them that it's slow because it's running over the internet on a machine back at the office but it'll be quicker when it's installed locally, or that he's using an out of date version and the bugs aren't present in the new version, etc. - that's his job, and consumers shouldn't be made to suffer just because they had the misfortune of dealing with a particular proficient liar at the point of sale. I'm not a salesman but even I could come up with several plausible reasons to explain away a poor demonstration that the average consumer would buy. If this law didn't exist then it wouldn't be so reasonable to take these claims at face value and you'd expect them to explicitly request they be placed in the contract, and they'd be at fault if they failed to do so, but the fact is that the law does exist so it's entirely reasonable to take the claims at face value, knowing you have an established legal recourse if they turn out to be false. That's exactly why the law was formulated, to make such transactions more efficient without having to engage independent experts and legal representation every time you buy something.
  • by delinear (991444) on Thursday May 13, 2010 @05:17AM (#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 Neil_Brown (1568845) on Thursday May 13, 2010 @05:31AM (#32190652) Homepage

    SoGA requires a consideration - that needn't be cash, it could be in the form of a service or the transfer of some other goods or chattels

    I think there is some confusion between the requirements of a contract (of which consideration, which need not be money, is one element), and contracts to which SoGA applies (sales for "money consideration"). To fall under SoGA, amongst other things, there must be "money consideration", and so a service, or transfer of other goods (e.g. bartering) is insufficient.

    So, no, cash is not required, since cash is a specific form of money, but non-money consideration is insufficient.

    (Again, IAAL, but, this is not legal advice!)

  • by crimperman (225941) on Thursday May 13, 2010 @05:54AM (#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

  • Re:Hence why: (Score:3, Insightful)

    by St.Creed (853824) on Thursday May 13, 2010 @06:06AM (#32190800)

    No, the judge basically said that even with that clause (which they had!), you still have to sell something that actually does what you say it does. So you can include that statement as many times as you want, but it just won't apply if you sell stuff that just doesn't work as stated.

  • Re:ROFL (Score:5, Insightful)

    by gnasher719 (869701) on Thursday May 13, 2010 @06:16AM (#32190860)

    That's kind of the point of why this is an interesting / important story. Everyone has those kinds of statements in the EULA, and this judge has ruled that if you're selling a product to do X, it better actually be capable of doing X because no amount of weasel-words gets you out of the fact that you sold someone a product that would do X.

    You'd have to read the complete case, not just the headline. If I promise you the software does X, but have a license that says "no warranty whatsoever", and I give you a free 14-day trial where you have a chance to find any faults, then you lose. But if I promise you the software does X, but have a license that says "no warranty whatsoever", and I give you no chance to find any faults before signing the contract, then I lose.

    A contract will stand unless it is too unfair. This one was too unfair not because of the words in the contract, but because the buyer had no chance to check the seller's promises.

  • by petes_PoV (912422) on Thursday May 13, 2010 @09:58AM (#32192696)

    There is no salesman making unrealistic promises to the customer.

    Ya, sure there can be. If someone writes a pice of crap and claims (maybe on the crap.org website) that it will do X and Y and Z, or that it's a replacement for a well-known commercial product (not that I'm thinking of GIMP or OpenOrifice or anything else that claims to be a substiture for a brand-leader here) and it doesn't do those things - or does them badly or only in part then that counts as an unrealistic promise.

    From a legal point of view, they may be able to get away with it, but froma moral or professional standpoint it's still inexcusable. The amount of time I've wasted trying to get badly written, buggy, poorly documented, mispeading, out-of-date, incompatible or uncompilable open-source / free software to work is massive. There are several FOSS projects where I have spent more time at my hourly rate trying to get the crap working, than the full-price commercial alternatives have cost. When you charge for your time, no software is free.

  • by sheph (955019) on Thursday May 13, 2010 @10:02AM (#32192742)
    I disagree. If a vendor tells you their software is going to do something for you their word should be their bond. The idea that you need detailed contracts, SLAs, and a team of lawyers to get what you paid for is a testiment to the decline of honesty in our society. Should the courts be the one to enforce it? I lean towards no, but it's not right that your average business owner can be shafted in a number of ways in the course of just trying to run his operation. It used to be if you were in sales, and you lied about your products you weren't in sales for very long. Word got around, and folks would rather do business with someone who was trustworthy. Now days it's become the accepted norm, and everyone does it, but it doesn't make it right.

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