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High Court to uphold rights of IT suppliers

Ground-breaking High Court judgment negates the age-old adage that 'the customer is always right'

Lawyers say a ground-breaking High Court judgment last week will make it harder for users to withold money or sue suppliers over new IT systems that fail to meet business needs.

Until the judgment set a precedent last week, most of the legal obligations in the supply of computer equipment and software focussed on suppliers. Users won legal disputes by arguing that the supplier had not supplied goods of satisfactory quality or that items were not fit for their intended purpose.

But last week's ruling, for the first time, places a series of legal responsibilities on users as well as suppliers. A failure to meet these obligations - which are implicit and not necessarily written into the contract - could lead to the user losing some key legal protections if they are involved in legal disputes.

The ruling came in the High Court's specialist Technology and Construction Court last week, when Judge Toulmin found in favour of a supplier that had delivered a system with some bugs but which was deemed workable and not defective.

He ruled that the North London user - wood mouldings company Winther Browne, which supplies retailers such as B&Q - was wrong to stop paying its leasing company simply because its computer system did not live up to expectations.

Judge Toulmin said the onus was on the purchaser to choose the right system and ensure that it met business needs. If not, users should alter their business wherever necessary to suit packaged software. There was a "duty of co-operation" to work with the supplier and to accept "reasonable solutions to problems" that will certainly arise.

This means that a system with bugs is not necessarily defective. It further implies that users will no longer be able to cease to co-operate with suppliers in any dispute over the quality of a system.

The change in emphasis from supplier to user is seen by lawyers as marking a fundamental shift from past judgments, in which users have won cases by showing only that the system was defective, in much the same way as consumers have obtained refunds if a vacuum cleaner or a new video player is faulty.

In his summing up, the judge said the supplier, Redhill, Surrey-based BML Office Computers, should have responded with more urgency to deal with outstanding problems. However, the supplier had "performed substantially" what it was contracted to do.

In the dispute over a system that originally cost around £70,000, Winther Brown claimed £900,000 in damages, loss of profit and acquiring a substitute computer system. The company now faces paying hundreds of thousands of pounds in costs.

Stephen Larner, an expert witness involved in the case said the judgment was "ground breaking" because of the responsibilities it placed on users. Another IT disputes specialist, Stephen Castell, said he welcomed the ruling because it enshrines into law best practices that users should already be following.

Comment

Computer Weekly supports the spirit of the ruling. Users need to be accountable for IT systems they specify. Too often, especially in the public sector, lack of accountability has been responsible for IT disasters.

But, in practice, Judge Toulmin has placed a potentially onerous burden on users. In last week's court case supplier BML was shown to have acted with propriety and due concern towards the user. However, the Judge has taken away some of IT departments' protection from a minority of unscrupulous suppliers.

Users need to be in a position where they can specify IT systems with precision, safe in the knowledge that the supplier will deliver exactly what was asked for.

This new ruling to some extent robs IT departments of that right. It has taken the concept of caveat emptor too far.

Read more on IT supplier relationship management

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