Gammasonics Institute for Medical Research Pty Ltd

Gammasonic v Comrad1 demonstrates the reluctance of the courts to interpret the sales event of Goods Act to include softw atomic number 18 transfers as a erect, preferring to leave the matter up to statutory review. It primarily discusses whether a software system package delivered by online download is effectively classed as goods for application of sales agreement of Goods Act2 and outlines the progressive court decisions that have considered the foreland and have begun to signalize software committed to a medium, corresponding a cd package as a goods.It also briefly addresses the applicability of statutory warranties of fitness for purpose and merchantable note and supports that fitness for purpose and merchantable quality are implied by coarse law giving reference the test for implication in position outlined in BP Refinery (Westernport) v Shire of Hastings (1977)3Background and overviewThe disputing parties are Gammasonics, a provider of services to radiologists in N SW, and Comrad, a job that provide software and in doion management systems to radiologists in Australia and New Zealand. The dispute concerns a m new(prenominal) in the midst of the parties for the delivery and inst allation of a software package via remote internet download called Comrad RIS which was to manage workflow, uncomplaining registration and appointments, online referrals and processing of Medicare claims for Gammasonics.The software was downloaded onto Gammasonics server and Gammasonic were purportedly responsible for hardware configuration and the ne cardinalrk fundament specified to run the software.Comrad delivered the software via internet download and certain areas of the software did non function as required. Gammasonics claimed to terminate the shrink for offend of price including calamity to deliver a functioning software package, failure to provide goods of a merchantable quality and/or for the delivery of a software package which was not fit for its i ntended purpose. 4 Comrad in turn sought an award for damages due to the repudiation of the cartel by Gammasonic.Trial ProceedingsThis illustration is an collection from Local Court against orders make by Magistrate Quinn in favour of Comrad for the amount of $58,011.21. There Magistrate Quinn was not convinced the software supplied by Comrad was a good as defined in s5 of the sale of Goods Act 19235 and held the act did not apply6. She also found Comrad failed in the delivery of certain components required for the software functioning notwithstanding it was stated that it was Gammasonics own acts or omissions and not some(prenominal) conduct for which it had contractual responsibility that rendered the system unworkable, such that Gammasonics purported termination was a repudiation of the contract thereby entitling Comrad to sue for damages.7Material IssuesThe following are the key issues that arise from the judgement and contain the essential elements of the subject which w ill be discussed in this case note.1. Whether a software package delivered by online download is effectively classed as goods for application of exchange of Goods Act.82. Whether equivalent terms of fitness for purpose and merchantable quality are implied by parking lot law.3. Breach of essential termsThe matter of whether a breach of contract is a question of mixed fact and law is also addressed in this case only it will not be extensively discussed at heart this case note.Whether a question of mixed fact and law arises was dealt with early in the case and Fullerton J was satisfied that the question of whether her Honour erred in retentiveness that Comrad was not in breach of the contract, involved a question of mixed fact and law and as such leave to appeal ought be granted.Comrad also filed a notice for contention on two points one concerning the implication of terms into the contract equivalent to the statutory warranties of merchantable quality and fitness for purpose, the other on the question of breach.The Sale of Goods Act 1923The definition of goods provided in the Sale of goods Act 1923 (NSW) s5(1) isGoods include all chattels personal other than things in action and money. The term includes emblements and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.It was submitted by Gammasonics that the software provided by Comrad was within the statutory definition of goods and they relied among other things on the implied condition as to quality or fitness in the act outlined in s19.9On appeal a request was made to consider whether there was a Fresh Analysis of Authorities10 with a more modern insertionion to reading material of the Act.Whether a software package delivered by online download is effectively classed as goods for application of Sale of Goods Act.11The case damps a thorough analysis and contains a comprehensive list of authorities that include case law and secondar y sources which have reviewed this question. The key area of difference illustrious was that the software was delivered by download onto a server. This distinguished the case from that of others including Toby Constructions Products Pty Ltd v Computa Bar (Sales) Pty Ltd12 where the software was held to be a good because it comprised both software and hardware.Gammasonics relied on a passage from Advent Systems Ltd v Unisys Corp 13 as bureau where an analogy was drawn to musical compositions and music on cds suggesting that once the software had been downloaded to the server it became a patent thing. However the common thread is that software provided on a disc falls within the statutory definition of a good while remote download via a license it appears currently does not.The case Fullerton J considered most analogous to the facts was St Albans City. 14 In this case the question of whether the transfer of the software, without the sale of the disk would give rise to a sale of goo ds under the Sale of Goods Act 1979 (UK) was considered by Sir Glidewell. There the disk was likened to an schooling manual however again the differentiation is made between the delivery of the software via disk format and remote download a distinction that was also noted by Sir Glidewell.An Australian case that revisted the question was Re Amlink Technologies Pty Ltd and Australian Trade Commission15 this case did not follow the reasoning offered in St Albans City16 by Sir Glidewell and considered the hint taken to the extreme would see goods being defined in areas that where never meant to be covered by the act.Secondary sources were further considered as Gammasonics highlighted what they supported to be a growing trend in Australia to recognize software as a good17 The recent Trade Practices Law Journal article by Svantesson discussed the stages of development citing Toby Constructions18as the first step taken in recognition of software sold unitedly with hardware as a good. The article also highlighted the decision in Amlink Technologies19 to recognize software attached to some physical medium and suggested the next logical step for the courts was to further recognize software not attached to a physical medium.A passage from a conference paper was also considered20where the distinction is made that where a customer purchases a digitized version of an encyclopedia it is a good however where it purchases access to the encyclopedia database it is a supply of a service. The facts of this case are most like that of the first scenario and the plaintiff submitted that the authorities support the conclusion that the software provided by Comrad is a good under the act21 It fell however to the principals of statutory interpretation in particular the everyday meaning of goods and possession.Comrad submitted that the ordinary meaning and any instructive words referred to things that are tangible therefore, because lines of computer code are intangible the positi on contended for by Gammasonics was dissonant.22Fullerton noted that it was preferable to give protection to consumers purchasing software by digital download and noted that research suggests that this is an increasing form of delivery means but stressed the need for legislative reform23 in the area not judicial intervention and found that the Sale of Goods Act did not apply.Whether equivalent terms of fitness for purpose and merchantable quality are implied by common law.The case also outlines that common law terms as to fitness for purpose and merchantable quality can be implied. This is in accordance with test for implication in fact 24 from BP Refinery (Westernport) v Shire of Hastings which is1) it must be reasonable and equitable (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it (3) it must be so obvious that it goes without pression (4) it must be capable of clear expression (5) it mu st not contradict any express term of the contract.Although the test was ultimately not considered.Breach of Essential TermsWith regard to the breach of essential terms two main areas were readdressed.The interfacing with Medicare and network incompatibility. In both cases the documentary evidence was reviewed. maculation the plaintiff submitted that the findings of the Local Court were in error and that Comrad was responsible for both resolving the problems of interfacing with Medicare and for creating the interfacing problems. Comrad failed to provide satisfactory evidence to support these claims and Fullerton J was not satisfied that Quinn J was in error therefore the appeal was dismissed.Effect on Current LawThis case has been referred to in a recent journal article discussing when software is a good.25 It has also been referenced in the recent edition of Australian mercenary Law26 as the authority for the principal that software delivered online does not constitute a good, w ithin the meaning of the Sale of Goods Act27.The case highlighted the need for legislative review in regard to the status of computer software and with the introduction of new legistlation The Australian Consumer Law (ACL) it has finally been decided that for the purposes of the ACL software is now specifically included within the definition of goods 28 affording consumers protection under s54 Guarantee as to acceptable quality29 and s55 Guarantee as to fitness for any disclosed purpose.30It also shows the courts reluctance for judicial intervention on matters that may have wider applications in the interpretation of legislation and illustrates the progressive nature of the courts to effect change.