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Downloaded Software – Might be good but not goods

More and more software is supplied by download rather than on physical media.  The Court of Appeal has recently (March 2018) ruled that this does not amount to a “sale of goods”.

The courts have consistently over the years ruled that only tangible property can be “goods”. This leads to the somewhat anomalous position that supplying software on a disk or stick is a sale of goods but delivering software in electronic form (e.g. by download from the internet) is not. This distinction is outdated and unhelpful. But the Court, while recognising the inconsistency, did not feel able to overturn the precedents.

The case here was in relation to the Commercial Agents Regulations, but it seems likely that the same approach would be applied to other legislation such as the Sale of Goods Act.  The results of this may be inconvenient – for example, it will exclude the statutory implied terms of satisfactory quality and fitness for purpose from software licences where the software is downloaded.

The issue is that legislation has not kept up with advances in technology.  The court declined to reinterpret legislation which was drafted before the internet took off, signalling that new legislation is needed to address the new norm of intangible property being supplied online.

One area where the legislation has kept up better is in the Consumer Rights Act 2015 (which implements an EU Directive).  It does not extend the definition of “goods” to include software delivered online but instead creates the new concept of “digital content” – data produced and supplied in digital form – which it then treats in very much the same way as it treats sales of goods.

There is huge pressure on Parliamentary time, especially at the moment, so little prospect of new, modern laws being enacted.  Trying to interpret the “old law” in a new environment is fun (for the lawyers!) – but not helpful in a modern world looking for certainty.

If you have questions, we can help.  Please get in touch.

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