Computer Supply Contracts

Jane Lambert
27 May 2010

“Computer supply contracts” are contracts for the supply of computer systems and services. Systems include electrical and electronic equipment (“hardware”) and programs for operating hardware (“software“). Services cover consultancy (feasibility studies, systems analysis, systems design and project management), maintenance (periodically servicing and occasionally repairing hardware and correcting defects, errors and faults in software), facilities management, access to on-line databases and the internet.

Computer Systems Contracts
Contracts for the supply of computer systems may be categorized as follows:

  • 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.

Most hardware and software is now sold across retailers’ counters with no formality than a till receipt. However, transactions for larger systems still tend to be in writing. Such contracts used to very one-sided with all sorts of exceptions and limitations clauses but these are much less common since the Court of Appeal decision in St Alban’s City and District Council v. International Computers Limited [1997] FSR 251.

Computer Services Contracts
This category covers a very wide range of services: consultancy, joint venture, maintenance, data processing, facilities management, outsourcing, application service provisions, database access, web design, internet service provision and escrow. The fundamental difference between a contract for the supply of goods and a contract for the supply of services is that the liability of a supplier of services is limited to the exercise of reasonable skill and care. That is generally less onerous than that imposed by the implied terms of quality of fitness under the 1979 and 1982 Acts. The boundary between systems and services is not always clear. A contract to develop software could arguably be either.

Further Reading

Case Histories
Jane Lambert “Mediating a Computer Supply Dispute” NIPC-Mediation 19 Aug 2010