Supply of Goods and Service Act

There is currently no accepted forensic procedure for acquiring data from mobile phones. There are a wide range of software applications which claim to extract information from phones in a forensically sound manner; that is, without making any changes to the phone’s memory. However, such claims cannot be verified, as these applications treat phones as a black box, using simple command – response protocols to acquire the data.

This review describes in principle the way a mobile phone network operates and how the data is processed. In addition it also mentions some of the tools available to examine mobile phones and SIM cards and some of their strengths and weaknesses. It also presents a short overview of the legal position of an analyst when examining a mobile phone and the main differences between investigations on a mobile device compared to standard storage device. (Science Direct)

Summary

This report reviews and analyses the most relevant issues concerning due to the nature of this project, an international organisation dealing with a small England based water services provider.

Reviewing of Supply of Goods and Service Act 1982 has shaped main parts of this report for International Water Services, report highlights main issues concerning and effecting software and hardware contracts, how they both get interpreted differently by law in England mentioned above.

Writing of this will help International Water Services making important decisions when drawing up the contract for provisions of expert water filtration system to Pennine Waters and how much damage a breach in contract, fault within software can damage them, which may also effect Pennine Waters Plc and its customers and what legal action they can instigate on certain terms in contract to hold IWS accountable for their loss, to help IWS a set of recommendations have also been highlighted in the report.

This report can be used as a starting point in formation of contracts between IWS and Pennine Waters Plc for limitation of liability and all sorts of other issues.

Terms of Reference

This report focuses on issues of technology and its provisions contracts and legal implications of this has for an international compnay, International Water Services entering into a contract to provide Pennine Water Plc expert water filration system, while making sure that all relevant laws are adhered to and considered carefully prior to formation of the contract.

Scope of this report is huge and information available is limitless but the constraints which have limited this to some extent are assignment dealine, time available and word count set at 2000 words.

Methodology

Research methods i have utilised are basic, evaluative and educational to gain insight into laws concerned by computer technology provision items, area’s covered are hardware, software contracts and how UK law of [Supply of Goods and Services Act1982] have an effect on contracts, liability and negligence.

In regards to resources available, internet law databases and journal available on internet have been the main ones.

Introduction:

Context

Pennine Water Plc is a small water company based in England, which requires replacing its existing water purification procedures with a computer controlled process based on expert system from International Water Services [IWS] which is a large international company also based in England, which provides water purification solutions to public utilities and private companies around the world, Pennine Water Plc is dependent of IWS to come up with right hardware and software solution for them to install which will be operated by Pennine Water Plc.

As assistant project leader for IWS this report is being written to highlight what legal challenges ranging from hardware and software contracts, effect of Supply of Goods and Services Act 1982 for provisions of hardware and software to liability for defective software and issues of claims arising from negligence, will be faced by IWS in regards to installation of water filtration plant for Pennine Water Plc.

Overview

First section includes legal distinction between hardware and software contracts, which have been broken into subsections; second section includes effects of Supply of Goods and Services Act 1982 on the entire project, explaining service standards, quality of work and skill of tradesman involved.

Third and fourth section includes details of liability side of things, if there is defect in the product (software), negligence and its implications if something has been affected by fault with the product.

Conclusion and recommendations are included in the last at the end of fourth section to sum up the argument and listing recommendations which needs to be considered, along with references and appendix.

Legal Distinction – Hardware & Software Contracts

There are several differences between computer hardware and software. However, the fundamental difference between hardware and software is that hardware is a physical device something that you're able to touch and see. For example, the computer monitor or the mouse is considered computer hardware.

Software is code and instructions that tell a computer and/or hardware how to operate. This code can be viewed and executed using a computer or other hardware device. However, without any hardware software would not exist. An example of software is Microsoft Windows; another example of software is the Internet browser and word processor.

(HWSW 1)

Hardware and software are both treated differently in law, although there is a degree of confusion when determining what a USB dongle comes under, it’s a physical device, which contains piece of software code to enable it to work, dongle on its own won’t work without software and vice versa for software, this issue was highlighted in Dyason v Autodesk Inc [1990].

In this project, water purification procedures with a computer controlled process based on an expert system is also combination of hardware and software, hardware which is required to physically filter the water and software which will dictate how input, processing and output of water happens, just like operation of CNC systems.

Software

In water filtration expert system, the software developed will be more than likely to be custom made or bespoke written specifically for that particular system to work.

A software contract is a contract for the supply of software (bespoke / off-the-shelf), many such contracts are not sale contracts, but are licence agreements or service agreements that allow a customer to use software in return for a licence fee as it is being specially written for contracting party.

Software is usually acquired by a licence, which is granted by the software publisher to the person acquiring the software. The licence may be for a fixed period of time. Software acquired by licence has two implications, Supply of Goods and Services Act 1982 does not apply to software, and computer software is exempted from it. (Brown, G)

Due to unique nature of computer software, when a contract is entered into for the licensing or bespoke development of software:

Both parties should know precisely what is expected in terms of performance and the standards required.

A comprehensive specification must be drawn up.

The contract should provide a fair means of identifying responsibilities and resolving disputes.

Liability for any injury to persons or property as a result of errors in the software should be considered.

The fact that software is by its nature digital content and that the end user is simply licensed by the proprietor to use it, which otherwise be an infringement of intellectual property to use without the licence, it is therefore very hard to define which act contract of software falls under, same as defining whether software falls under category of “goods" or “services" as it may come on optical media, downloaded from online source or comes as a boxed solution with all the documentation other than optical medium, although Supply of Goods and Service Act 1982 may cover the supply of expert system as giving advice by the system can be interpreted as supply of service .

Although Computer software is exempted from much of the Supply of Goods and Services Act 1982, these acts ‘imply’ terms into a contract for sale or supply of goods or services. The implied terms, cannot be modified or excluded. (Brown, G)

Hardware

The Supply of Goods and Services Act 1982 implies terms into contract in which the ownership of goods changes hands. In the case of water filtration expert system the title of ownership of that piece of hardware is transferred to the purchaser on purchase, as piece of hardware is classed as “goods" this is mainly regulated under Sale of Goods Act 1979, although it’s amended in Supply of Goods and Services Act 1982.

When hardware is bought it must be of satisfactory quality, hardware can be bought outright of hired, contracts for the sale of computer hardware are standard sales of goods contracts and are subject to implied terms in 1994 Act, which also states that goods must be of satisfactory quality. Satisfactory quality means an appearance and finish, free from minor defects, safe, durable and fit for purpose which goods of the kind in question are commonly supplied.

Before the replacement of Sale of Goods Act 1979 with Sale of Goods 1994, several cases ended up in rather unfair way, the old act required the goods to be “merchantable" quality instead of “Satisfactory" Micron Computer System Ltd v Wang UK Ltd [1990].

Effect of Supply of Goods and Services Act 1982 on the Project

Supply of Goods and Services Act 1982 plays a vital role in adding terms to contracts, where the ownership of goods passes (hardware) and contract for services (bespoke software), these sort of contracts are usually referred to as hybrid contracts which involve part goods part services, as part of this expert system software development contract will be between the International Waters Services and Pennine Waters Plc in situation when software development is in-house, but in a situation that development part of the software is sourced out from International Water Services than a similar contract should be in place between them which will only focus on services, which may include completion time, price for development, updates, training, implementation etc.

The Supply of Goods and Services Act 1982 requires a supplier of a service acting in the course of business in England, Wales and Northern Ireland to carry out that service with reasonable care and skill and, unless agreed to the contrary, within reasonable time and make no more than reasonable charge. As Pennine Water Plc is based in England and will be supplier of water services to general public / consumers, they would operate and control the system, so therefore International Water Services would be trusting Pennine Water Plc to carry out the service with due diligent, reasonable care and skill, if this is not take care than resulting filtered water will be off a bad quality.

In regards to timing, if no agreement has been made with supplier about completion of the work, or about the charge to be made, then if it is not completed within a reasonable time or the reasonable price, this is also treated as breach of contract and other party may instigate proceedings for compensation, International Water Services should ensure that work is completed in reasonable time if no time frame has been set.

When writing software contract we must “have detailed provisions about completion times" Bainbridge (2004 [p199]), further to this is highlighted in contract breaches below.

Contract Breaches

Another important factor to be remembered is breach of contract and how it can be defined to limit some damage. If a party to a contract breaches its terms, the remedy depends on the type of terms that have been broken.

Generally there are two types of terms in contracts; warranties and conditions:

Condition: Breach of this gives the distressed party the right to cancel the contract and claim damages.

Warranty: Breach of this allows the distressed party to claim damages only — the contract remains in force and must be completed by both parties.

Examples of breach of condition:

Failure to deliver a product by an agreed date is a breach of condition; the buyer can cancel the contract.

The buyer may also claim damages which would be equivalent to the difference in cost of buying a similar computer elsewhere.

He can also claim other expenses and losses incurred as a direct result of the breach.

Examples of breach of warranty:

A supplier agrees to deliver a computer system with terminals that are a particular colour, but delivers terminals with different colour.

This is a breach of warranty unless there is a special reason why a particular colour was specified.

The buyer will be entitled to damages only, and will still have to pay the agreed price of the computer.

There are number of way in which certain clauses can be inserted or added to restrict the liability of a party who is in breach of contract. There are two types, exclusion (gives total exemption) and limitation (limits ability to a specified amount):

Exclusion clauses: A supplier may exclude his liability for late delivery if this is caused by circumstances beyond his control.

Limitation clauses – A software supplier may limit his liability for faulty software to the licence fee he has been paid.

Limitation of liability – A person drafting a contract is always keen to limit or exclude their liability while ensuring that the other party is bound to perform his part of the contract.

However, a one-sided state of affairs is rare since exemption clauses are controlled by statute – the Unfair Contract Terms Act 1977. This Act limits the extent to which liability can be excluded or limited for breach of contract or negligence.

Business liability for death and personal injury caused by negligence cannot be excluded or limited in any way. (Brown, G)

Possibility of Liability for Defective Software

Identification of liability is a very important aspect in drawing up and before considering any sort of contract for service, In International Water Service’s case it will be writing a bespoke application to work with their purpose built hardware for expert system for Pennine Water Plc, to whom Pennine Water Plc will be operating, so its slightly complicated as who to blame whether its software malfunction due to coding procedures or wrong settings set by the users.

Along with other issues, if International Water Services subcontracted other software company to write the software for them which to be used in expert system for Pennine Water Plc, who is liable party for defective / malfunctioned software, in Stent Foundations Ltd v M J Gleeson Group Plc, it was stated: “Clear allocation of risk may reduce the likelihood of litigation or arbitration ... the parties should be clear and explicit in their contracts so that parties start a project with clear knowledge as to where the risk lies rather than disputing the allocation of risk when the project goes awry". Therefore it is paramount to draw up comprehensive requirements and objectives of software along with training and support for it prior to hatching of any contract.

Relating to above certain terms about contract can be agreed probably with less price tag but with limited liability, but this has to be mutual across the board otherwise situation like St Albans City and District Council v International Computers Ltd [1996], which may get classed as unfair contract terms covered by Unfair Contract Terms Act 1977.

Software maintenance and update issues will also be important, whether an update is to fix a bug known during trial or operation of the system, or whether its purpose is to add additional features required by Pennine Water Plc to enhance the operation.

Clarification of Negligence

After careful consideration of possible situation where the water filtration expert system may be defective then International Water Services may be subject to negligence by Pennine Water Plc, in situation of this taking place, Bainbridge (2004 [p208]) states that there needs to be three things to be present in order to instigate prosecution for negligence which are:

“A duty of care owed to the injured party"

“A breach of that duty of care"

“Consequential loss"

Further to above, if the supplier does not carry out the work with reasonable care and skill the law threats the matter as breach of contract on which a redress can be pursued, also a supplier of service who has broken a contract may also be liable for consequential loss which may be suffered by other contracting party. In order for this to take place Pennine Water has to provide detailed proof of breach of above conditions that International Water Services is at fault.

Concept of negligence was introduced in Donoghue v Stevenson [1932], according to Bainbridge (2004 [p210]) “A company ... will not necessarily be potentially liable to the world at large in negligence. The ... company will be liable, however, to those whom they could contemplate being adversely effected by any negligence act" therefore Pennine Water could still held International Water Services liable for negligence as adversely effected party; it is responsibility of International Water Services to ensure that the software provided to Pennine Water is free from bugs, malfunctioning code and reliable enough.

Although in an alternative position a case can be brought forward if water is not filtered properly and gets passed on to customers of Pennine Water and that causes some sort of health issues, illness or death. Similar case Linklaters Business Services v Sir Robert McAlpine Ltd [2010], resulting from negligence in services.

Conclusion

.This section will include summing up of argument.

Recommendations

Suggesting what needs to be agreed.

Glossary

CNC - computer numerical controlled refers to the automation of machine tools that are operated by abstractly programmed commands encoded on a storage medium, as opposed to manually controlled via hand wheels or levers, or mechanically automated via cams alone. (wiki)