Volkswagen – a terms and conditions lesson for suppliers

It’s unlikely anyone has escaped hearing about the VW emissions scandal. Interestingly, Bosch, as the supplier to VW of the alleged cheat software, has now been sucked into the scandal. From press reports it seems that Bosch claims that it warned VW not to use the software for illegal purposes.
No doubt we will learn the extent of this “warning” in due course. How much easier though if Bosch were able to say that its contract with VW made it absolutely clear that Bosch only supplies its software for lawful purposes and that VW undertook that it would not use its software for any illegal purposes.
An extremely random survey of supplier terms of sale revealed only one that contained a term to such an effect. Terms of sale predominately act as a shield to protect the supplier in the event that something might be wrong with the goods or the software it supplies. Rarely do they address the issue of potential brand damage to the supplier by reason of the use to which its customer might subsequently put the goods or software supplied.
Suppliers really should now give thought to including a simple term in their terms and conditions of sale providing that their customer agrees not to use the goods or software supplied for any illegal or immoral purpose. It is difficult to see how any customer could object to such a term.
Admittedly, most customers of the market strength of VW will only deal on their own standard terms of purchase. Again though suppliers should at least try to seek an amendment to those purchase terms to the above effect. The inference of any rejection of such an amendment is that the customer may intend to use the goods or software for an illegal purpose and, in the wake of the VW scandal, customers must be wary of raising any such inference.
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Andrew Cockburn is based in Edinburgh. As part of the Jordans Group, he provides clients within the SME, legal, accountancy and wider professional communities with access to a comprehensive range of corporate legal services, including company formation, company law advice and general company compliance throughout the UK.