This article is based upon the decision in BSkyB Limited and another -v- EDS LLC and another.
This is an extremely complicated case covering a significant period of time both in negotiation, during the contract and in subsequent litigation. BSKYB argued that EDS made fraudulent misrepresentations during the process of tender and negligent misrepresentations through the term of the contract. To this the courts concurred.
The contract between the parties contained a number of useful elements in large scale contracutal negotiation including step in, whole agreement clauses and limitations on damage.
Why is this relevant?
Due to the fraudulent misrepresentations made by the defendant the claimant, BSKYB was able to overturn both whole of agreement clause which seeks to exclude the negotiations and but perhaps more importantly the limitation on damage. Currently, the defendants are looking at potential damages in excess of £200m rather than the limit of £30m.
Conversations had in negotiation between the relevant negotiators of the parties created what was percived by the courts to be misrepresentations so serious that in relying on them the claimant was required to rely on information that the defendant knew or ought to have known was wrong. In so doing, the defendant has a contract upon which it could not rely.
Make sure that the sales force within your organisation are making accurate statements about your ability to deliver the contract and that they aren't over egging the qualification of themselves and those who may be involved in the contractual delivery.