Can Software be classed as Goods or a Service?

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Due to its intangible nature it can be unclear whether software can be classed as ‘goods’, and therefore be subject to the implied terms stipulated in the Sale of Goods Act 1979, or rather as a ‘service’ under the Supply of Goods and Services Act 1982. This often leaves consumers and businesses unsure as to whether they are covered by the latter, which implies a lower standard than the Sale of Goods Act 1979.

If software is purchased in the more conventional way ‘off the shelf’, in which you receive a physical copy of the software, then it is clear that the item can be classed as ‘goods’ and therefore the consumer is covered by the Sale of Goods Act 1979. The Sale of Goods Act 1979 states that goods must be of a satisfactory quality.

However, things become less clear when the item is purchased online, and downloaded to the user’s computer or device directly from the internet as the consumer is not physically in the possession of an item. As no physical item is sent to the user, many people believe that the software is classed as a ‘service’ and covered by the Supply of Goods and Services Act 1982 which implies only that the service must be carried out with reasonable skill. Despite this, software may not always be classified as a service when bought online, and it remains unclear as to whether software is technically a good or a service.

This absence of certainty regarding the status of intangible items, coupled with the growth in software purchased online could force the UK to reconsider how software is considered within the law. Meanwhile, for more clarity it is prudent to check this with the seller, when buying software online, to ensure you are fully protected if a problem were to arise.

Aston Bond offers Commercial Law Services to assist individuals with business transactions, to find out more about our services click here.

 

Joel Chapman, Marketing Assistant

jchapman@astonbond.co.uk