DTI Sale of Goods
Sale and Supply of Goods and
Services
Legislation
(Edited and posted by
John Antell)
Sale of Goods Act 1979
Supply of Goods and Services Act
1982
Unfair Contract Terms Act 1977
Information and Communications Technology: Contracts for Computer Systems
Last updated 24 Oct 2002
Contracts for the supply of computer systems are categorized as:
 |
hardware contracts: contracts of sale, hire or lease of computers, peripheral equipment and their electrical and electronic components; |
|
|
software contracts: these can be simply licences or contracts to write software; and |
|
|
turnkey contracts: contracts for hardware and software, usually with maintenance as well. |
Hardware Contracts
These are essentially contracts for the supply of goods although they nearly always include, or are accompanied by, licences for systems software. They are therefore governed by the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982 both of which import implied terms of fitness and quality.
Software Contracts
These can be sub-divided into bespoke or software development contracts and software licences.
Software development Contracts
These resemble building or engineering contracts in structure and share much of the same language. In a properly drawn up bespoke contract the supplier undertakes to develop a suite of programs to perform various functions in accordance with an agreed specification. Provision may be made for monitoring progress at stages (known as "milestones") with acceptance and payment being conditional upon successful completion of those stages. Because customers for large systems tend to have at least as much bargaining power as suppliers, the terms of software development agreements are more likely to be negotiated and spread risks more evenly between the parties.
Software licences
These are copyright licences in form. They usually accompany the media on which software is recorded. Such licences tend to be offered on a take it or leave it basis. They are therefore quite brief and simple. Typically they consist of a grant, restrictions on use and transfer, exceptions, limitations and choice of law clauses. It is still uncertain whether package software licences import implied terms of quality or fitness.
Turnkey Contracts
These are agreements for the supply, support and maintenance of hardware and software. In practice they rarely consist of a single document though there is often an umbrella agreement incorporating a number of subsidiary agreements for the delivery of the hardware and software components.
