Computer software is ‘goods’, court rules

Posted: 13th July 2016

RCJIn an important decision which established that computer software can properly be viewed as ‘goods’, notwithstanding its intangibility, the High Court has awarded substantial compensation to a commercial agent whose client backed out of a promotion deal without notice.

The agent had agreed to promote the client’s software in the UK market. Under the non-exclusive deal, the former was to receive a consulting fee of £10,000 per month, plus stepped commission on sales achieved. However, the agreement had only been in place for six months when the client purported to terminate it forthwith on the basis of the agent’s alleged contacts with a competitor.

The agent launched proceedings and, in upholding its claim, the Court found that the sale of software is a ‘sale of goods’, within the meaning of the Commercial Agents (Council Directive) Regulations 1993 which therefore applied to the contract. Termination of the agreement without notice was not justified by anything that the agent had done and amounted to a breach of contract.

The Court awarded the agent £475,000 in compensation pursuant to Regulation 17(2) of the Regulations. The agent also won £15,631 in damages for breach of contract – reflecting sums that it would have earned during the three-month contractual notice period. Smaller amounts were also awarded for commission due to the agent on certain post-termination sales.