The council purchased software from the defendants to calculate council taxes. Mistakes in the software undercalculated the amounts required to be recovered causing the council substantial losses. The company sought to rely upon a clause in the contract limiting the extent of their liability.
Held: The clause was unreasonable in the light of the very substantial nature of the defendant’s business, the availabiliity to them of insurance in sums far greater than the limit of liability, and inequality of bargaining power. However, the damages payable for revenue lost because of faulty software were reduced to allow for the recovery of the losses in subsequent tax years.
Nourse LJ: ‘Parties who agree respectively to supply and acquire a system recognizing that it is still in the course of development cannot be taken, merely by virtue of that recognition, to intend that the supplier shall be at liberty to supply software which cannot perform the function expected of it at the stage of development at which it is supplied’.
Judges:
Sir Ian Glidewell, Nourse LJ
Citations:
Times 14-Aug-1996, [1996] 4 All ER 481, [1996] EWCA Civ 1296
Statutes:
Unfair Contract Terms Act 1977
Jurisdiction:
England and Wales
Citing:
Appeal from – St Albans City and District Council v International Computers Ltd QBD 11-Nov-1994
A liability limitation in a computer contract was an unfair contract term since it was a standard term, and it restricted liability when there had been no attempt to justify the amount chosen for the limit by reference, for example, to a . .
Cited by:
Cited – Sam Business Systems Ltd v Hedley and Company TCC 19-Dec-2002
. .
Lists of cited by and citing cases may be incomplete.
Damages, Contract
Updated: 31 October 2022; Ref: scu.89464