Software Dispute

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We continue to review the arbitration practice in disputes arising from the commercial activities of IT companies. Today we will consider a case with software delivery.

Story plot

The buyer of the software (plaintiff) appealed to the arbitration court with a request to oblige the seller (defendant) to fulfill the terms of the contract for the supply of software , to recover the penalty and losses.

The reason for applying to the court was the supply of software that does not meet the characteristics of the software specified in the annex to the contract. As a result of installing improper software on the customer’s equipment, a software failure occurred. Using the supplied software resulted in incorrect application operation, integrity violation, distortion or data loss.

As a result, the arbitration court ordered the seller to install and install the software in accordance with the contract; the rest of the lawsuit was refused. Continued under the cut.

The reason for the court decision

1. The contract submitted to the court is a mixed one, containing elements of a contract for the supply of computer programs and a contract for the provision of services for a fee ( software implementation contract ).

2. In accordance with Clause 4, Article 454 of the Civil Code of the Russian Federation, the conditions provided for in paragraph 1 “General Provisions on the Sale of Goods” of Chapter 30 apply to the sale of property rights, unless otherwise provided by the content or nature of these rights.

3. According to article 456 of the Civil Code of the Russian Federation, the seller is obliged to transfer to the buyer the goods stipulated by the contract of sale. Unless otherwise provided by the contract of sale, the seller must simultaneously with the transfer of the thing transfer to the buyer its accessories, as well as documents related to it (technical passport, quality certificate, operating instructions, etc.) provided by law, other legal acts or by contract.

The list of works and the list of equipment and software supplied are defined in the appendix to the contract, however, in fact, the plaintiff was supplied and another program was installed.

4. The arguments of the defendant that the plaintiff accepted the programs (rights to software) stipulated by the contract without comments and claims on the assortment and shortcomings, which follows from the act of delivery and acceptance of work and acceptance and transfer of rights (licenses) to use the software are insolvent.

Verification of the functional properties of the software could be carried out only with its direct use and application. Therefore, the adoption of the goods by the plaintiff does not exempt the defendant from the supply of goods of appropriate quality. In addition, given the peculiarity of the supplied goods, the plaintiff has the right to make a claim for its direct use for two years, on the basis of Art. 477 of the Civil Code of the Russian Federation.

Dispute Comments

1. The dispute under consideration arose in connection with the delivery of software in a different configuration. However, there are often cases of delivery of simply poor-quality software. In this case, you can also refer to the provisions of Art. 454 and 477 of the Civil Code of the Russian Federation on the quality of the goods and the timing of claims for its shortcomings.

2. It is necessary to pay attention to the type of contract used. In this case, the court qualified the contract for the provision of software and their installation as a mixed contract for the supply and provision of services. A licensing agreement , unlike a software supply agreement, provides the licensor with greater protection against claims for software quality.

Therefore, due attention should be paid to the selection of the type of contract and the elaboration of conditions on guarantees and responsibility for the provided computer programs and databases.

3. The agreement should agree on the timing of software acceptance with the condition of testing it, and then sign the acceptance certificate. Otherwise, the act does not close questions regarding claims to the quality of programs.

Judicial act

FAS Resolution of the Moscow District No. KG-A40 / 5005-11-P of June 14, 2011

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