Scenario: The third party wanted a system to support their accounting and financial reporting requirements as well as a point of sale system to handle their retail and wholesale operation.
The insured had various stores within a capital city, which were all to be connected to each other and head office. The insured had the distribution rights for a well-known software package, which provided both back office and sales function.
Problem: Late Delivery of the System.
Data was dropping out of the point of sale system. The automatic ordering system was not updating into the main system.
The cash reports did not balance.
Outcome: Breach of Contract claiming that the system was not of merchantable quality & was not fit for stated purpose.
Breach of Trade Practices Act Section 52 (Misleading and Deceptive) Negligent representation and misstatements.
Claim: $250,000