The ruling in the largest case ever heard in London’s Technology court has now set a precedent for end users to claim large payouts from contractors who exaggerate their skills and experience.
Mr Justice Ramsay who presided over the case accepted that EDS had made unsubstantiated claims in order to win the £48million contract to build a customer management system for BSkyB. The contract was awarded ten years ago and EDS have since become part of HP.
However two years after awarding the contract, BSkyB terminated the agreement between themselves and EDS due to their failure to fulfil the obligations in their contract. The project had been hit by numerous delays and rising costs. BSkyB were then forced to appoint their own team of IT workers to complete the project which reportedly cost £265million.
The original contract had damages capped at £30million but Mr Justice Ramsey, in an unprecedented move, ruled that this figure should be disregarded. Speaking of this ruling to ContractorUK, Jeremy Drew from law firm Reynolds Porter Chamberlain said: “This is a major decision that’s going to have a huge impact across a broad range of businesses. Any service company that bids for customers will have to be much more careful about avoiding loose sales talk and exaggerating its past experience and capabilities, otherwise it could find itself on the receiving end of a similar claim.”
However, Mr Justice Ramsey did not actually set the amount of damages payable but BSkyB believe it will be in the region of £200million despite their original claim for £709million.
Mr Drew concluded: “IT and other service providers will now have to be more careful that they can back up any sales claims with hard evidence. In the past it’s always been the case that the customer has had to make a judgement call on the sales pitch of a bidding company to assess whether they are competent and capable, but this decision means the burden will now be shifted to the bidding company to rein in any exaggerated claims.”
HP are now expected to appeal the ruling. It would appear that an agreement between HP and BSkyB is still some time away.