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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 Neil_Brown (1568845) on Thursday May 13, 2010 @03:22AM (#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 Znork (31774) on Thursday May 13, 2010 @03:39AM (#32190202)

    It sounds like it would be applicable against post-sale removal of features as well, as in the Sony PS3 other os case.

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

    by Anonymous Coward on Thursday May 13, 2010 @03:48AM (#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.

  • by KibibyteBrain (1455987) on Thursday May 13, 2010 @03:55AM (#32190272)
    I still think this is concerning. While this particular law is contingent on a sale, the overall point is that the Judge made a ruling based on his legal opinion of the fitness of software for a given application based on a law which could just as well not have required such a condition, as many don't require. Other laws not contingent on a sale having occurred but rather just the distribution of a product or service could therefore be applied to software in general based on this case.
    And don't go pulling the "put some pseudo-legalese magic incantation in my code saying its not fit for even the reasonably-implied purpose and all the trouble will magically go away" card because that won't work in the exact high-liability suits(i.e. someone dies, the stock market crashes) it intended to defend the developer against, in the real world.
  • by Kr3m3Puff (413047) * <me@@@kitsonkelly...com> on Thursday May 13, 2010 @04:16AM (#32190334) Homepage Journal

    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 AK Marc (707885) on Thursday May 13, 2010 @04:18AM (#32190346)
    And don't go pulling the "put some pseudo-legalese magic incantation in my code saying its not fit for even the reasonably-implied purpose and all the trouble will magically go away" card because that won't work in the exact high-liability suits(i.e. someone dies, the stock market crashes) it intended to defend the developer against, in the real world.

    Just because you don't want it applied isn't enough. The "Sale of Goods" act doesn't cover free things. "Fit for purpose" requires a stated purpose. And this wasn't about bugs, it was about software that didn't come close to doing what the salesmen asserted it did. It wasn't just a big, but it was a piece of software that didn't really work.

    This is a great ruling for the people. Someone lies to sell shit that doesn't work, and they get sued. "It's a bug" isn't a defense of fraud. That's all this means, and your "I refuse to listen to anyone that disagrees with me using arguments I don't have answers for" comments can't change the reality. This doesn't affect OSS, and it doesn't affect people that ship products that actually work (even if they have bugs). The software in question didn't do what it was sold to do, and so they should be sued and should lose. *Everyone* should like this decision except people who engage in fraud.
  • by Chris Newton (1711450) on Thursday May 13, 2010 @04:49AM (#32190478)

    Interestingly, the sale of goods act would cover open source software - even if the price was zero.

    I am not a lawyer, but I fail to see why. From the Sale of Goods Act 1979 [opsi.gov.uk], 2(1):

    A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.

    I doubt £0 would constitute "consideration" in this context.

    As far as I can see, the most significant consequences of this ruling are that:

    • software can be covered by consumer protection legislation;
    • those selling software cannot escape responsibility for the related obligations just by putting small print in a contract of adhesion; and
    • liability can exceed the original cost of the software where the damages are greater.

    This is particularly interesting because if EULAs do have any legal standing at all here, then they are probably a contract of adhesion based on technicalities about copyright.

    I imagine some lawyers are running around looking nervous at quite a few big software companies this morning. All those DRM systems, for example, just became a bit of a liability: if I install a game and it simply doesn't work, then all those arguments about not returning opened products for a refund just became untenable. (Take note, Ubisoft and games shops.) And if you play silly wotsits on someone's computer to try to install your software's copy protection system and you get it wrong and damage their system, $DEITY help you, because it looks like the courts aren't going to. (Take note Sony, Adobe, et al.)

    Of course, we'd have to see the complete context before reading too much into this case, because it sounds like the sale was made following significant contact between the parties and specific claims by the sellers, which might or might not still be the case with typical off-the-shelf or preinstalled software.

  • by Z00L00K (682162) on Thursday May 13, 2010 @04:52AM (#32190494) Homepage

    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 the administration.

    Of course - there are no tools available to understand the business model of a customer to be able to create a workflow in a software solution to suit that customer. That takes time and requires a study of work process. But that doesn't mean that it can't be done in a different way in a new software since it leaves room for improvement.

    Of course - there will always be bugs and quirks, the important thing is to make sure that the bugs and quirks aren't fatal for the operation. Flexibility of an application also allows the users to handle the application in an unexpected manner which can cause problems. However a too strict application will cause more trouble.

    Testing is important, but it's important to realize that unit testing can be a problem as well as a help. A minor software change can cause a cascade failure of the tests cases written causing a minor change of the core code to be a major overhaul of the test cases. This may of course be caused by bad overall design, or bad test case design. At some time in the lifecycle of a solution it's time to raise the level from the individual modules to the system as a whole. Module testing can in no way save an application from troubles caused by a bad overall design.

    System verification is always late in a project, and since time is running short at the end of a project that phase is often pressed through in a hurry leaving design mistakes big as grand canyon open for the future. Performance testing is also something that is left to be resolved later. Of course - you can't fix all performance issues during development and system verification - just give it the best shot. It takes a lot of experience to design a system that scales well - however sometimes it contains some bottlenecks. The skill is to identify and hide the bottlenecks in the best possible way, usually by doing background processing unless a redesign can resolve the performance problem. However some performance problems are hard to resolve and others are expensive in the cost of man-hours and application complexity. An example would be a statistics module executed quarterly in an organization. That usually uses a predefined set of rules and is ideal for background execution.

    An example of a bad solution when it comes to user experience is the fact that in Windows when you have mounted drive on a remote server over a slow connection it can slow down some operations incredibly since the computer "needs" to address and get a response from that drive before it permits you to continue a simple operation like a "Save As..." even though you didn't have that drive in mind.

  • Sounds like (Score:4, Interesting)

    by zero0ne (1309517) on Thursday May 13, 2010 @05:45AM (#32190692) Journal

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

  • by St.Creed (853824) on Thursday May 13, 2010 @05:55AM (#32190728)

    You know, I know a few Chinese folk, including the owner of a couple of factories, and they complain that the American buyers don't want the slightly higher priced quality goods but always buy the lowest priced crap they also put out. Tariffs won't solve that issue at all because it just increases the prices for all of their stuff. Apart from that, if you institute tariffs the next step would be for China to retaliate likewise or demand compensation from the WTO.

    But perhaps you might want to take this up with your local store-owner? It seems they're best positioned to solve this. Because surely, it can't be that the fact you buy the cheapest stuff you can find, has anything to do with the fact you end up with crap?

  • by Geeky (90998) on Thursday May 13, 2010 @07:08AM (#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.

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