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Supply of Goods and Services Act: When are ‘goods’ not ‘goods’?

21st January, 2013

Chocolate giant Cadbury recently sought to use the Supply of Goods and Services Act 1982 (SOGSA) to make the firm that designed, built and installed a fire detection and control system responsible for all of Cadbury’s losses arising out of a fire at one of its factories. In an interesting decision, the Court of Appeal rejected Cadbury’s claim that the system constituted ‘goods’ under the SOGSA.

Cadbury had sued ADT Fire and Security plc for £100 million following a devastating factory fire in 2005. While holding ADT to have been negligent, the High Court judged that Cadbury was mainly responsible for the losses and reduced ADT’s share of the liability for the loss to 25 per cent.

Cadbury appealed on two grounds. The first was that the system supplied constituted ‘goods’ and that those goods were not ‘fit for purpose’. Had the argument succeeded, this would have made ADT responsible for Cadbury’s losses which were a natural consequence of the system’s failure.

The Court of Appeal decided that a bespoke system such as the fire system installed by ADT could not be categorised as “goods” within the meaning of the SOGSA. It therefore rejected that argument.

The Court of Appeal also said that it was inappropriate to read the system specification documents as a guarantee of the system’s success that would automatically result in a breach of contractual obligations if there was a system failure. The obligation undertaken by ADT was to exercise reasonable skill and care in designing the system and there was no evidence that the suppression system was inappropriate in concept or could never have worked.

The lesson to be taken from this case is that had the contractual documents been clearer as to exactly what Cadbury wanted and needed from the system, their claim would have been far more straightforward.

For advice on any of the issues raised in this article, please contact John Devoy at [email protected] or call 01244 405523.

 

 

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