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UK Court Finds Company Liable For Software Defects
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."
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!
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.
Mr. Ballmer woke up in a sweat in the middle of the night, not knowing exactly why...
Not really. If you're doing something for free, many laws don't come into play. For example, this is about the "Sales of Goods Act". If you're not selling, you don't have to worry.
Accountability for software sold is a good thing. Because right now, there is none.
Then the hobbyist should stop claiming his software was fit for a certain purpose.
I imagine you'd only be liable if you actually sell your product to someone, for money, promising them that it'll do something for them. If you just whacked a GPL programme on a website with a label "here is my programme, may or may not work, YMMV", I doubt you could be held accountable for what anyone does with it.
The crux of the court case, if I read it rightly, is that in the UK you aren't allowed to promise your product can do things that you know it can't do and then sell it to someone on that basis. That's standard- what the court case tested is whether putting "(but it probably can't)" in the small print is enough to get you around that. Turns out its not.
That's a good thing.
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.
What part of the word "sale" do you not understand?
How we know is more important than what we know.
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.
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.
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.
No sig today...
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.
D.O.U.O.S.V.A.V.V.M.
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.
Learn to love Alaska
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.
If someone has used freely avaialable open source code to control a dangerous machine or play the stock market, it sounds like it's their own fault rather than the fault of the original author (who may not have intended their source code to be put to such uses). As the GP said, selling someone something vs making it available as reference code for them to do what they like with it, are two completely different things.
which is totally what she said
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.
Interestingly, the sale of goods act would cover open source software - even if the price was zero.
I think that this would depend on exactly what you meant. Distribution of software alone (i.e. without embodiment in a physical object, be it a computer or a CD), may not meet the definition of a "good". Similarly, SoGA applies to "contracts of sale of goods"; in the case of open source software distribution, there are likely to be arguments as to whether:
However, it is very likely that a developer could only be sued for GBP 0. The England & Wales and Scots Legal systems tend to support the little (or wee) man and wouldn't allow a huge writ to sue a hobbyist unless they were making buckets of money out of selling poor quality software.
This is, perhaps, a risky statement, given that a contractual remedy should put the detrimented party in the position as if the contract had been properly performed, unless the measure of damages for a claim in tort, for which the remedy is the preservation of the status quo (i.e. putting the detrimented party in the position as if the tortious act had never happened).
As such, the fact that the licensor has made very little from the software does not mean that the licensee could only receive very little in terms of compensation, unless the licensor has an enforceable limitation of liability clause - and, a judge may be more inclined to find that, where the product was distributed without charge, that such a limitation was reasonable. However, without a limitation of liability clause in the agreement, it might be harder to find grounds to limit recovery, where the loss suffered by the licensee, as a result of a contractual breach, was significant.
However, the presence of a bug, or the failure of a piece of software to perform in a particular manner, is not necessarily a contractual breach - it would depends on the terms of the contract.
Section 14 in the Sale of Goods act determines quality
However, s14 only applies to business-consumer contracts ("Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality."), and so one would need to assess whether the hobbyist distributing code a business - merely charging for an item does not make one a "business".
In other words, it depends; there are likely to be situations in which SoGA does apply to open source software (or, to my mind, a physical item embodying open source software, which might then give rise to claims against the software embodied in that product directly), but also many situations in which is does not.
(IAAL, who does a lot of work with Free software, but, these are just my personal views)
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.
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.
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.
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, 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:
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.
... MS ... contract ... accountability on both sides.
Congrats. You've made my day. That has to be one of the funniest sentences I've read here on Slashdot.
Tell me, when was the last time you read a EULA for a Microsoft product?
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.
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 . .
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.
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!)
The perfect law to use when going after all the fake AV software companies.
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.
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
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?
Therefore, by the (faulty) logic you're using, you're just a cow with a keyboard - osu-neko (2604)