The BSkyB v EDS dispute is one of the largest commercial cases, with important financial implications for any sales company.

Eighteen months after the case was heard, the High Court finally decided on the BSkyB v EDS. The Court found that, the IT supplier EDS (now part of Hewlett-Packard) had made fraudulent misrepresentations, as to its ability to deliver a project within the stipulated timescale, when it pitched for a £50 million contract to build BSkyB a customer relationship management system.

The Court found that, EDS had falsely represented that, it had carried out a proper analysis of the time needed to deliver the project and that it held the opinion that, it would deliver the project within the stipulated timeframe and had reasonable grounds for doing so.

The Court went on to find that, as a result of EDS’s misrepresentations, BSkyB had been induced to award EDS the contract for the project.

It is important to remember that liability for fraud cannot be limited. So, while the contract capped EDS’s liability at £30 million, that limit was ineffective due to fraud. Although the final amount to be recovered by BSkyB has yet to be determined, BSkyB’s solicitors anticipate that, EDS will be liable to pay BSkyB at least £200 million. BSkyB’s original damages claim was for in excess of £700 million. Hewlett-Packard has announced that, it intends to seek permission to appeal the decision.

You may, therefore, want to audit your sales and tendering processes and take steps to make sure your sales teams are fully aware that, they must not make claims about the company’s ability to deliver during contract negotiations, that cannot be backed up!