Wednesday, 27 January 2010

Fraudulent misrepresetation in computer contract

Out-Law reports today that BSkyB has won a claim against EDS - now owned by Hewlett-Packard, but the Sky claim pre-dates that acquisition - for fraudulent misrepresentation. In the case, in the Technology and Constrution Court, Ramsey J held that by describing its Customer Relationship Management system as 'proven leading-edge technology'EDS had gone too far. The judgment is reported to be 500 pages, the longest ever, and it isn't available on Bailii yet (and even when it is I wonder how many people will be able to find time to read it all).

Out-Law tells us that it was not proven leading-edge technology, but leaves it at that - not surprisingly, otherwise their report might have run to hundreds of pages too. EDS blamed the customer for changing its requirements too much, but that doesn't really seem relevant to the issue in the case - until the full judgment is available, there will be many aspects that don't add up very satisfactorily.

BSkyB claimed £700 million, and expects to recover £200 milion, although the contract was only worth £48 million. Of course, contracts like this usually limit the liability of the supplier, and also exclude any statements made while the deal was being negotiated by means of an 'entire agreement' clause. However, perhaps the most important thing here is that once you get into the area of fraud exclusion clauses don't work, which I imagine is why BSkyB made a fraudulent misrep claim. Interesting. I doubt there will be a flood of similar claims - but who knows? There are bound to be plenty of other dodgy claims made in similar deals.

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