My Lords, I am very pleased to have the support of the noble Lord, Lord Sugar, for Amendment 34A. I do not know whether he is going to make a personal appearance today, which would excite us all, but let us see. I see that his name is on other amendments so you never know.
Traders often use third-party software in their digital content products. This software is usually provided to the trader on a no-warranty basis, meaning that the third party will not guarantee that the software works or is free from bugs. However, Clause 34 inserts a term into the contract between the trader and the consumer that the digital content is of satisfactory quality. This means that in effect the trader has to guarantee the first party’s content even when it does not have the same guarantee from the third party whose content it is. This creates a liability for the trader which is beyond its control. The clause risks stifling innovation as it would prejudice SMEs which have less negotiating power with third parties and may have to stop using third-party software that is provided without warranty.
Let me provide an example. An app provider creates a consumer-facing app using software that it has licensed in from a third party. The software licensor provides its software on standard terms which state that no warranty is given. The app provider must then make its app available to consumers subject to the provision in the Bill that the app is of satisfactory quality, even though it does not have that warranty upstream and even though it has no control over the software licensor’s portion of the app. If the app does not work because of the software licensor’s software which the app provider has no control over, and for which it has no recourse against the software licensor, the app provider will still be liable to the consumer. That is an illustration of the impact and I hope very much that my noble friend will take it into account when considering the merits of this amendment. I beg to move.