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EDS Loses to BSkyB in Major Technology Case

By Peter Brudenall

In a major decision of London's Technology and Construction Court that will have global repercussions, technology vendor Electronic Data Systems (“EDS” ' now part of Hewlett-Packard (“HP”)) has been found liable for a deceitful misrepresentation that induced broadcaster BSkyB to enter into a contract with it. Although the case did not create any new law, it is the clearest example of an English court finding, in the context of the outsourcing and IT services industry, that pre-contract assurances and promises can amount to deceit, and in this case leading to a damages award well above the agreed liability cap.

As a result, the case will lead to IT and outsourcing service providers, both in the UK and globally, reviewing their pre-contract sales processes, and how they manage bids and promote their services to potential customers. Customers too will be more mindful of pre-contract discussions, and the potential for such discussions to be given greater weight in the event that the contract is unsuccessful. It is also possible that bid costs for major outsourcing contracts will increase as a result of the decision, and that vendors will increasingly deem particularly complex IT projects as too risky.

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