IT supplier found liable for fraud

BSKYB v EDS [2010]

The much awaited judgment in this high profile case was delivered in favour of B with a possible award of at least £200m in damages. The High Court found an individual employee of E (now part of HP) had made a fraudulent misrepresentation. Nevertheless despite the hype, this decision has not created any new legal concepts or principles nor should it have a major impact on the way IT providers deliver their products and services. However, it is a pertinent reminder to suppliers to ensure their sales personnel do not deliberately or recklessly make pre-contract claims that the company cannot back up. There are also some useful pointers on how to ensure that entire agreement clauses are as watertight as possible and how to make certain that settlement provisions are all encompassing.

facts:

B issued an ITT for a contract to build a customer relationship management system with two key timescales stipulated for its integration schedule. E was awarded the £48m contract on the basis that the managing director of the relevant part of E represented that E could meet these timescales. Problems with the project arose and B stepped in to build the system itself at a cost of £265m.

B brought a claim against E, alleging E had:

The contract had a limitation of liability clause of £30m and there was an entire agreement clause stating the contract superseded “previous discussions, correspondence, representations or agreement between the parties”.

decision:

The court found:

B’s claim was for over £700m and an interim award of damages was made of £270m. HP (which now owns E) was going to appeal but since we initially reported on this case in February 2010, the companies have settled on a final total sum for HP to pay of £318m.

points to note:

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