BSkyB v EDS judgment puts suppliers on their guard.
The long awaited decision on the BSkyB v EDS case was finally handed down on 26th January. EDS, (now part of Hewlett-Packard) was found to have made fraudulent misrepresentations with regard to its ability to deliver to BSkyB a project within the agreed timeframe.
The project was for a £50,000,000 CRM system. In particular it was considered that EDS had made false representations that:
- a proper analysis of the time needed to deliver the project had been made;
- it was of the opinion that it would be able to deliver within the right timeframe; and
- it could reasonably justify that.
As a result of these misrepresentations, BSkyB had entered into the contract with EDS. Although there was a limitation on EDS’s liability of £30,000,000, the terms of the agreement between the parties provided that there was no limit for fraudulent misrepresentation. On 3 February, the court made an order for interim damages of £200,000,000 to be paid to BSkyB within 14 days, during which time the judge will consider what the final award will be. Notably, BSkyB’s original damages claim had been for over £700,000,000.
Although Hewlett-Packard had stated that they intended to seek permission to appeal, this may be a crucial tool in any negotiation that takes place between the parties over the next two weeks.
Although the judgment did focus on one individual at EDS and his dishonesty in dealing with BSkyB, and although EDS was found guilty of only one (of five) count of fraudulent misrepresentation, nevertheless this case has important implications for businesses and their suppliers. In particular, suppliers will be scrutinising very carefully their tendering processes and practices, both verbal and written, adopted by sales people during the negotiations running up to the award of the contract.
See further: article in Computer Weekly.
