IT lawBy Jonathan Cohen, Bird & Bird, LondonImplied duty toco-operateAnglo Group plc v Winther Browne & Co Ltd and BML (Office Computers) Ltd: implying a duty ofco-operation into a contract for the supply of a standard computer system (unreported, 13 March 2000).Earlier this year, Judge Toulmin QC gave an important judgment in the evolving law of IT contracts.

The judgment covers implied terms; the right to terminate a computer supply system for repudiatory breach, and the use of expert witnesses.

IT lawyers would be well advised to include it in their new year's reading.Winther Browne supplies DIY stores with decorative items.

In 1995 it began to search for a new computer system to manage its operations.

It decided to assess products on the market directly rather than take advice from consultants.

As part of this process Winther Browne entered into discussions with BML for the purchase of BML's Charisma software package.

Charisma contained programmes for stock purchase, stock and credit control and general financial management.

In addition BML offered Bespoke software to be operated in conjunction with Charisma.

However, Winther Browne decided to restrict its interest to the standard package.

After a meeting to clarify Winther Browne's requirements, BML sent its proposal letter on 20 November 1995.

In that letter BML also advised Winther Browne to adapt its pricing and discounting structures because they were not compatible with computer methodology.

Then on 21 December 1995, BML contracted with Winther Browne to supply it with Charisma software together with hardware and maintenance and support services.

The contract was made on BML's standard terms and conditions.

These included a requirement that purchasers of standard software should satisfy themselves that the software met their requirements.

Winther Browne financed the purchase through a leasing agreement with Anglo Group.

The leasing agreement contained an implied term that the computer system would be reasonably fit for its purpose.

This resulted from s.9 of the Supply of Goods and Services Act 1982.Although the system went live in accordance with the contractual timetable, Winther Browne began to complain about Charisma.

For example, it contended that the process of operating some of the programs was too long-winded.

At the same time some data input functions did not allow the replacement of one incorrect entry without re-entering all data.Notwithstanding BML's additional attempts to meet Winther Browne's concerns, Winther Browne threatened legal action because it contended that Charisma's shortcomings were having an adverse impact on its business.

BML explained that most of Winther Browne's complaints could be resolved by changing its use of the system and by BML providing further refinements and consultancy.

It continued its efforts to deal with the outstanding problems.

However, in April 1997 Winther Browne informed Anglo Group that it was discontinuing its payments under the leasing agreement because the system was not operating properly.

At the same time Winther Browne wrote to BML, alleging that it was in repudiatory breach of contract because Charisma was not working properly.

In the circumstances it accepted BML's repudiatory breach of contract.

The central issue in the ensuing litigation was whether the defects which Winther Browne could establish constituted a repudiatory breach of contract by BML, and therefore a repudiatory breach of the leasing agreement by Anglo Group.

Before ruling on that question the judge considered the weight he would attach to Winther Browne's expert evidence and the obligations of the parties to the supply contract.Expert evidenceWinther Browne relied on the evidence of two expert witnesses.

However, the judge rejected their evidence as unreliable.

He found that both of the witnesses had failed to conduct themselves properly as independent expert witnesses.

The first expert was a claims negotiator for a firm of computer consultants.

The judge found that in giving evidence he had failed to distinguish between his role as a claims consultant, and his duty as an expert witness.

That duty was to present evidence which was not influenced by the demands of litigation.The second expert was an employee of the same consultancy as the first.

He accepted that one of his reports presented to the court was written as a negotiating tool to support Winther Browne's claim, rather than as an independent report.

His evidence met the same fate as his colleague's.

The judge listed the duties of an expert witness in particular the obligation to provide independent assistance by way of an objective unbiased opinion.

Although he rejected Winther Browne's expert evidence, the judge declared that BML's expert witnesses had carried out all their duties to the court in full.Obligation to co-operateThe judge noted that Winther Browne had not wished to purchase bespoke software to adapt Charisma to its working practices.

It had opted for just the standard system.

In contracts for the supply of a standard system the parties were subject to an implied obligation of co-operation.

This requires the purchaser to communicate its needs to the supplier clearly and to take reasonable steps to ensure that the supplier understands those needs.

For its part, the supplier must inform the purchaser if and how those requirements can be satisfied.

If they cannot be satisfied the supplier must inform the purchaser of any available alternatives.The supplier must also take reasonable steps to ensure that the purchaser is trained in how to use the system, and the purchaser must make reasonable efforts to understand its operation.

The parties must then co-operate to solve any problems.Termination of supply contract and leasing agreementThe judge then assessed whether BML was in breach of the supply contract.

He found that in terms of the overall performance of Charisma, BML had complied with its obligations.

He then considered whether Winther Browne had established its specific individual complaints.If it had, then the next issue would be whether those individual complaints taken together deprived Winther Browne substantially of the whole benefit of the contract.

This was the test set out by Lord Diplock in Lep Air Services v Rolloswin Ltd [1972] AC 331 at 349.After analysing the complaints the judge held that they were unproved, or were caused by Winther Browne's refusal to change its working practices or to accept BML's offers of assistance.

He characterised other complaints as trivial, or held that Winther Browne had not proved that any losses arose.

This last category included a bug which caused incorrect stock figures to appear.

In the circumstances there was no fundamental breach of contract entitling Winther Browne to terminate the supply contract or the leasing agreement.

As a result Winther Browne was ordered to pay its outstanding instalments to Anglo Group plc.Implications for practitionersClients purchasing or supplying package systems need to be informed of the duty toco-operate.

If problems arise then they should keep detailed records of that co-operation process and, or, attempts to initiate it.

If litigation does ensue then parties should avoid using the same expert both to formulate the claim (or the defence) and to give expert evidence on it.Jonathan Cohen is a solicitor at City law firm Bird & Bird