England and Wales High Court (Technology and Construction Court) Decisions

9. On 23 April, 1999, His Honour Judge Newman ordered the trial of the following Preliminary Issues:

10. Mr. Steare and Mr. Fitzgerald had some contact with each other in 1991 when the defendants unsuccessfully tendered to Wren & Co. for the supply of an earlier version of Profile.

11. Over the period since 1983, the defendants developed five successive versions of Profile as follows:

Profile versions 3 and 4 were developed in a programming language known as "Basic Plus". Profile versions 5 and 6 were developed in a programming language known as Informix. Profile version 7.0 (which was marketed as Profile 2000) was developed in a programming language known as Powerbuilder.

12. Mr. Steare said that there were some calls from Mr. Fitzgerald over the following years, but Mr. Fitzgerald said that there was only one call to follow up the unsuccessful tender. However, Mr. Steare did continue his awareness of the defendants' products by reading the defendants' advertisements in "Recruitment International", a trade magazine to which he subscribed. Among the features of Profile advertised was what has been referred to in this action as a "To do list and Diary". Advertisements contained the following sentence:

13. Mr. Steare said that the renewed contact in 1996 came as a result of a providentially well-timed telephone call from Mr. Fitzgerald in March, 1996. Mr. Fitzgerald said that contact was renewed in a slightly different way in April, 1996. The documents support Mr. Fitzgerald's version, which I accept. The only significance of that conflict of recollection is that it is one indicator of the measure of reliability of Mr. Steare's recollection.

14. On 14 April, 1996, Miss Aoife O'Hickey, the defendants' Business Development Manager, wrote out of the blue to Mr. Steare giving information about Profile 2000 (Version 7, then a new product) and offering a demonstration. That letter was addressed to "Jonathan Wren" for the attention of Roger Steare at the New Street address. As a result, Mr. Steare telephoned Mr. Fitzgerald and on 18 April, 1996 Miss O'Hickey again wrote to Mr. Steare mentioning the telephone conversation between Mr. Steare and Mr. Fitzgerald on 17 April, 1996. In that letter, Miss O'Hickey confirmed that a meeting had been arranged between Mr. Steare and Mr. Fitzgerald for 23 April, 1996 and recorded that Mr. Steare's secretary had said that Mr. Steare would be away on holiday on that date. In the event a meeting did take place between Mr. Steare and Mr. Fitzgerald before 26 April, 1996, probably on 23 April, 1996.

15. Mr. Steare said that in the telephone conversation there was a detailed discussion in which he gave detailed information to Mr. Fitzgerald and various representations were made by Mr. Fitzgerald. Mr. Fitzgerald disputes Mr. Steare's account of that telephone conversation.

16. Mr. Steare and Mr. Fitzgerald are agreed that Mr. Steare told Mr. Fitzgerald that Wren & Co. had set up Wren Executive and that Mr. Steare was the Chief Executive of both companies. I accept that Mr. Steare did not say that Wren Executive was a wholly owned subsidiary of Wren & Co. Mr. Steare said that he was looking for a high performance package to install on the existing network of Wren Executive. I accept that Mr. Steare told Mr. Fitzgerald that he needed a new software system to be running by July and that it would have to be installed on and compatible with the existing hardware and network already in place, and that the staff would not have a high degree of computer literacy and would have to be trained as part of the package. Mr. Steare said in evidence that Mr. Fitzgerald described Profile 2000 as having all the features needed for a recruitment agency, in particular:

17. I accept the evidence of Mr. Fitzgerald that he would not have said such things in a telephone conversation. Such statements appear in the defendants' literature, but he would consider it rather "corny" to speak in such terms to Mr. Steare whom he rightly regarded as an "educated user". Mr. Fitzgerald recalled the telephone conversation as a brief call in which his intention was simply to persuade Mr. Steare to attend a demonstration. He says that he would have mentioned some of the "exciting" new features of the latest version of Profile. Because it had been developed for Novell or Windows NT it was particularly suitable for Wren Executive's set-up. No doubt Mr. Fitzgerald gave some salesman's "puff" in terms which neither he nor Mr. Steare can remember. The claimants have not proved that any warranty or representation of legal significance was made in that telephone conversation.

18. On 14 April, 1996, the defendants sent sales documents about Profile 2000 to Mr. Steare at his office at New Street.

19. On 25 April, 1996, Mr. Fitzgerald went to the offices of Wren Executive at Victoria Street to demonstrate Profile 2000 to Mr. Steare. Those offices comprised an open plan office and a Board Room. In the open plan office were about a dozen desks for Wren Executive's consultants, each having a PC served by a network. There were also one or two PCs in the Board Room. Mr. Steare says that Mr. Fitzgerald brought with him a notebook computer to demonstrate Profile 2000. Mr. Fitzgerald says that he brought a rather heavy desktop PC for the demonstration and carried it up some stairs and Mr. Steare suggested that it might be more convenient for him to bring a notebook computer. That difference is again unimportant except, again, as an indicator of the quality of the witnesses' recollection. I think it more likely that the recollection of Mr. Fitzgerald is correct on that matter.

20. Mr. Fitzgerald's computer was not connected to the network of Wren Executive, but he demonstrated Profile 2000 using stock data of the sort likely to be found in an employment agency. Mr. Steare was impressed and at the end of the demonstration said that he was interested in buying Profile 2000 subject to it being demonstrated to the satisfaction of Miss Aloisie Krasny, his office manager, and subject to his being satisfied by a priced quotation.

21. Mr. Fitzgerald accepted that as a result of what he was told at the demonstration or on the telephone, he knew that the system was to go to Wren Executive. He thought the business was already running using ResourceIT. He knew it was a new venture. He did not give any thought to funding and did not run a credit check on Wren Executive. Mr. Steare was known to him and that was good enough for him. He took it that he was dealing with Mr. Steare as Chief Executive of Wren Executive. He explained that correspondence was sent to Mr. Steare at New Street at Mr. Steare's request because he wanted speedy progress and letters sent to the offices of Wren Executive at Victoria Street would have been delayed because Mr. Steare was not there.

22. Mr. Fitzgerald was asked whether he agreed with what was alleged in paragraph 7 of the Statement of Claim to have been said at the demonstration. That paragraph is in the following terms:

24. Paragraph 8 of the Statement of Claim was then put to Mr. Fitzgerald. Paragraph 8 is as follows:

25. Mr. Fitzgerald said, and I accept, that the things set out in paragraph 8 were not said to him, nor did he say them. Apart from (a) and (e), they are extracted from the defendants' sales literature. However, he would have understood them as the common aim with the exception of reporting. Some customers do not want reports, and Mr. Steare said nothing about them. It does appear that this paragraph was a reconstruction by the pleader from documents rather than the product of Mr. Steare's memory. Mr. Steare had left the employment of the claimants before the pleading of the Statement of Claim and he did not approve it before service.

26. There were four differences of significance between Mr. Steare and Mr. Fitzgerald with regard to the demonstration. They differed on four topics:

27. Mr. Steare said that Mr. Fitzgerald demonstrated that a photograph of an applicant could be stored on disk so that it could be sent to a prospective employer. That was agreed. But Mr. Fitzgerald said that he also demonstrated that a moving and sound video of an interview with an applicant also could be stored on disk. Mr. Fitzgerald said that he remembered demonstrating a video of a song by a female singer whom he named and that he said that this facility would be available in a short time and would be included without cost. Mr. Steare said that no such video was demonstrated. Mr. Steare's memory was demonstrated to be faulty in many respects, but I do not believe he would have forgotten such a demonstration. This was for him a vital demonstration whereas for Mr. Fitzgerald it was one of many. At the time he was making about four demonstrations each week. I find that Mr. Fitzgerald has confused his recollection of this demonstration with another in this regard.

28. There was a difference as to whether mailmerge was demonstrated. It certainly was not demonstrated on a printer because a printer was not connected to Mr. Fitzgerald's computer. I find that it probably was demonstrated on screen.

29. It was said that Mr. Fitzgerald promised that the system would be running and operational by the beginning of July, 1996. Mr. Steare certainly made known that that was what he wanted. If he had been told expressly that he could not have delivery by that date, he might well have thought of looking elsewhere, though that is not certain. He was under considerable pressure as to time, and he might not have thought he could do better elsewhere if delivery somewhere near that date could not be given by the claimants. Mr. Fitzgerald says that he made no promise as to date of delivery. I accept that denial: it is consistent with later documents. Equally, I am sure that Mr. Fitzgerald did not say that what Mr. Steare wanted was out of the question.

30. Mr. Steare says that the To Do List Diary was demonstrated to him and that he was told that it was part of the package. Mr. Fitzgerald says that it was not demonstrated because it was not ready and that he told Mr. Steare that it would be sold to him but delivered later. It is plain from documents put out by the defendants both before and after this demonstration that the defendants were claiming that the To Do List Diary was in existence and ready for sale. It is said by the claimants that although they bought it, it was not delivered and they suggest that it was not delivered because it was not in fact ready. It was important to Mr. Steare and was included in the quotation documents sent the following day among the items of which the package "currently consists". I cannot believe that Mr. Steare would have agreed to pay for the full price if he had been told orally that the package to be delivered would be short of one important item. It may well be that the To Do List Diary had not been completed at the date of the demonstration. Mr. Fitzgerald explained that it was the part of the software which had to be written last. It drew together items selected from other sections of the software and had to be written in relation to those other sections. Version 7 was written in another language from Version 6 and so had to be completely re-written. It may well be that Mr. Steare thought he had seen the To Do List Diary when he had in fact seen something different. Profile 2000 holds records in three sections, Candidates files, Employer files, and Opportunity files. Each of those sections includes its own diary which forms a log of activities performed by all the consultants including "to do" notes addressed to certain individuals. The To Do List Diary was separate and would search and collate information from all the other files and diaries. When a consultant entered the To Do List Diary he could enter his own code and be given a list of all the "To Do" items relating to him. Mr. Steare may have seen the other diaries and thought that he was seeing the To Do List Diary. It would not be at all impossible or indeed unlikely that the defendants would sell an item as part of a package in the confident belief that it would be ready in time for delivery. I do not accept that Mr. Fitzgerald told Mr. Steare that the To Do List Diary was not ready and would be delivered when it was ready.

31. Miss Krasny was not a computer expert, but she was literate on Microsoft Office and she was to be satisfied as the user. At some date between 25 April 1996 and 7 May, 1996, Miss Krasny was given a demonstration at the defendants' offices and came back satisfied. There is no evidence of what she saw or of what was said by or to her.

32. On 26 April, 1996, Miss O'Hickey wrote again to Jonathan Wren for the attention of Mr. Roger Steare at the New Street address enclosing three documents. The first document was called "Profile 2000 (Profile for Windows) Outline Function Document". The actual document cannot be identified, but it is clear from other similar documents dated before and after 26 April, 1996 that the document identified the Core System and indicated certain other enhancements which might or might not be added. The Core system included a To Do List & Diary. The second and third documents were "Profile 2000 Quotation" and "Profile 2000 Quote narrative (specification)". The quotation was addressed to Jonathan Wren at New Street and set out certain priced items including project management and training. The specification, like other literature of the defendants, included the statement:

At the top of the quotation were printed in capitals the words:

No standard terms and conditions of sale were given to Mr. Steare and Mr. Steare did not ask for them.

33. Mr. Steare did not want the scanner and some other features included in the quotation and he asked for a revised quotation.

34. On 7 May, 1996 sent to "Jonathan Wren" a revised quotation omitting the unwanted items and quoting a revised price. The quotation was in the same form as the previous quotation and included the words in capital letters which I have quoted above. The covering letter included the statement:

35. Mr. Steare signed that quotation and returned it to the defendants at about 9.00 a.m. on the following day, 8 May, 1996. He sent the signed quotation by fax from his office at New Street, and accordingly the cover sheet of the fax message was headed with the name of Wren & Co. On 8 May, 1996, Mr. Fitzgerald visited Mr. Steare at New Street and Mr. Steare gave him a cheque for 10% deposit in the sum of £8,190.04. That cheque was a cheque bearing the printed name of Jonathan Wren Executive Limited.

36. Later in the day, on 8 May, 1996, Miss O'Hickey sent two letters addressed to "Jonathan Wren" for Mr. Steare at New Street to arrange a meeting with Mr. Fitzgerald and the defendants' technical director to discuss technical matters.

37. On 15 May, 1996, the defendants wrote to Wren & Co. at New Street enclosing a receipted invoice addressed to Wren Executive.

38. On 29 May, 1996, Miss McGuckin, the defendants' Project Manager, wrote to Miss Stranski at Queen Victoria Street and addressed the letter to Wren & Co.

39. It is accepted that on 8 May 1996 there was a contract between Wren Executive and the defendants. The terms of that contract are in issue.

40. By paragraph 11 of the Statement of Claim it was alleged that the defendants made certain representations to the claimants. By a departure from that pleading, in further and better particulars served a month before trial, on 7 May, 1999, it was also alleged that those matters were also terms of the contract between the defendants and Wren Executive and of a collateral agreement between the defendants and Wren & Co. Paragraph 11 is in the following terms:

42. The contract for the provision of the defendants' Profile 2000 system was concluded between the defendants and Wren Executive by the transmission of the signed quotation and the cheque for the deposit on the account of Wren Executive on 8 May, 1996. On 8 May, 1996, Wren Executive accepted the offer contained in the whole of the documents sent by the defendants under cover of Miss O'Hickey's letter dated 26 April, 1996 as varied by the revised quotation sent on 7 May, 1996. (Issue 1).

43. By that contract, the defendants agreed to supply to Wren Executive the software and services specified in paragraph 13 of the Statement of Claim, namely the Profile 2000 software system together with annual maintenance, installation, and specified numbers of days for training and the like for the price set out on the signed quotation.

44. The defendants' standard terms and conditions were not incorporated into the contract with Wren Executive for the following reasons. (Issue 2).

45. Mr. Fitzgerald said in evidence that the defendants' standard terms and conditions at the time were contained in documents obtainable from the defendants' computer. Those documents were headed respectively, "Microdec PLC - Application software support agreement", "Microdec PLC - Conditions of Contract for the supply, installation and support of computer systems" and "Microdec PLC - Package software licence".

46. The "Application software support agreement" ends with spaces for signature by the defendants and the customer. The other documents have no such space for signature. The defendants rely in particular upon the "Conditions of contract for the supply, installation and support of computer systems".

47. The "Application software support agreement" begins:

48. The "Conditions of contract for the supply, installation and support of computer systems" contain the following provisions:

49. In the trial of these preliminary issues, I am not concerned with questions arising under the Unfair Contract Terms Act, 1977. If they had been relevant for consideration they would have been dealt with at the main trial of the action. Accordingly, I have not heard argument about the application of that Act, but if the terms relied on were to have been found to form a part of the contract between the parties the defendants would have been in difficulty in proving that the terms relied on were reasonable.

50. The short answer to the defendants' contention that the terms are a part of the contract is this. If the defendants wish to rely on such stringent terms they must at least comply with their own requirements as to the making of a contract on those terms. They have not complied with those requirements and therefore the contract was not made on those terms.

51. Clauses 1 and 19.4 should be read together. Clause 1 requires three things:

Clause 1 includes the important words, "This agreement shall only become binding on MICRODEC upon its acceptance and signature by a Director of MICRODEC". The terms were drafted to form a written agreement intended to become binding only when a director of both parties had signed the agreement. Those requirements are underlined by clause 19.4. The customer cannot acknowledge that he has read an agreement when he has never had that document and has never made any separate acknowledgement. Unlike some forms of agreement with spaces for signatures, which are nonetheless specifically adopted as the terms of agreement without signature, this document specified that it was only to become binding on signature. None of the requirements of clause 1 were fulfilled. There was no signature of the document by either party and the document was never sent to the claimants. Therefore, in accordance with the terms of the document itself, there was no agreement in the terms of that document. The reference in clause 1 to a contract schedule suggests that the draughtsman of the document envisaged that there would be a contract schedule naming the parties and identifying the product sold with the price, and spaces for signatures of the parties. There was no contract schedule either in the form itself or independently of it. By contrast, at the end of the "Application Support Agreement", there were places for signature by both parties to the agreement. Of course, in this instance there were no signatures.

52. Mr. Steare said in evidence that he read the words on the quotation referring to the Microdec standard terms and conditions of sale but thought that the reference was to what was written in the other documents sent with the quotation on 26 April 1966.

53. My attention was drawn to the "Ticket Cases" from the nineteenth century up to Interfoto Picture Library Limited v. Stiletto Visual Programmes Limited [1989] QB 233 as discussed in Chitty on Contracts, 27th edition paragraphs 12-007 to 12-016. Because there was in the present case no offer or acceptance in the manner specified by the terms relied on, it is unnecessary to refer to those cases. However, the decision of Interfoto does inferentially give support to my approach that in the present case the specified manner of offer and acceptance should be strictly complied with as a first requirement of a contract in the terms of the document. In Interfoto, Dillon L.J. said at page 438:

It is unlikely that that approach would be applied to a written contract actually signed by the parties, as this one was intended to be. But if these terms had been drafted without a requirement of signature for offer and acceptance, the approach of Dillon L.J. would have been reason enough to have rejected the unusually stringent exclusion of liability clauses relied on by the defendants.

54. I turn to the remainder of the terms of the contract (Issue 3).

55. I first deal with time for performance. I have already indicated that Mr. Fitzgerald made no oral promise as to time for delivery and performance, and there was nothing in writing on that subject. Equally, Mr. Steare made it plain that time was most important to him and that the failure of the previous system left him very short of time: it was vital that the system be up and running by the beginning of July, 1996. Mr. Fitzgerald said that an "aggressive timescale" was required. There is no doubt that there was an implied term that the goods and services should be supplied within a reasonable time: Supply of Goods and Services Act, 1982 section 14. Time was of the essence of this contract. A reasonable time for performance would have been by 1 July, 1996. That was the date for performance contemplated by the parties. Mr. Fitzgerald did not say at the time that that date could not be met. Miss O'Hickey's letter suggested that it could be met. The software sold was allegedly already in existence. The process of installation on the existing hardware should have been short. The training to be provided was quite brief. Mr. Steare and Mr. Fitzgerald agreed that after the contract an implementation plan would be agreed. The agreement that there should be an implementation plan did not mean that the whole question of time was left up in the air. It was a requirement of the contract that the implementation plan should so structured as to result in the system being up and running by 1 July, 1996.

56. By clause 15(a) of the Statement of Claim, it is alleged that there were express or implied terms of the contract with Wren Executive that the software and services sold would fulfil the objectives set out in paragraph 7(e) of the Statement of Claim and would also fulfil the specific requirements of Wren Executive as set out in the Statement of Claim. Those objectives were stated to be:

I find that there was an implied term that the software and services would fulfil objective (i). Objectives (ii) and (iii) are too vague and imprecise to be the subject of a contractual term. Moreover, I have already found that objective (iii) was not discussed.

57. By clause 15(b) of the Statement of Claim it is alleged that there were implied terms that

58. There were implied terms that the software should be of reasonably satisfactory quality and reasonably fit for the purposes of Wren Executive. Those purposes included the attainment of objective (i) to which I have referred above. The purposes also included the matters set out as "requirements" (a) to (f) of paragraph 8 of the Statement of Claim to which I have already referred and which for convenience I set out again as follows:

Those matters were in part requirements and in part promised in the literature sent with the defendants' quotation. As to the existing hardware and software, there was no undertaking by the defendants to support or maintain the existing hardware or the Windows or Microsoft Office software.

59. There was also an implied term that the associated services including installation would be performed by the defendants with reasonable skill and care. I have already dealt with the term as to time.