Court of Appeal rules on Sony PlayStation

Dismissing an appeal from the High Court, the Court of Appeal has held that Sony Computer Entertainment was entitled to recover the full value of Sony PlayStation memory cards that were lost by a distribution company before they were delivered to Sony's customer, Game Stores Limited.

The court rejected the defendant's argument that Sony's loss was limited to the cost of replacing the lost goods unless it proved that it could not make good the lost sale to its buyer.

The case sets a precedent for when a manufacturer and seller of goods loses them through the fault of another before delivery can be made then the damages for loss will be the value of goods lost being the price earned as opposed to the lower cost of the manufactured goods.

In other words, the full sales price including an element of profit margin. If the defendant wished to argue that the loss was less because the profit could have been earned in any event by a replacement or substitute sale then the defendant would have the burden of proving this point.

Distributors can therefore be held liable for this though many larger/wiser ones will typically try to exclude or limit such losses through the use of appropriately drafted contracts.

Case: Sony Computer Entertainment UK Limited v Cinram Logistics UK Limited, 8 August 2008.

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