The case is unique because Sky claimed EDS was fraudulent, and had dishonestly exaggerated its abilities and resources when bidding for the contract.
This case result shows two things: IT suppliers’ sales teams must be more careful about their claims when they are trying to sell a system. Gone are the days when there was a disparity between what is sold and what is delivered.
Second, the liability cap is immaterial in fraud cases. EDS had a cap that it would not be liable for more than £30m worth of damages. But because Sky sued for fraud, the liability cap was rendered irrelevant.
These kind of sales processes are so long and complex that badly selling the solution does not imply bad faith. I'm completely sure that the sales team had not all the information of how things were going to be delivered and for sure they took some optimistic assumptions, but I'm sure they're not trying to swindle sky.
It absolutely blows my mind how these things can be so complicated. There's a pipe and a meter. The meter is read n times a year. Invoice. Done.
I can see how asset management can be complicated for a utility, but what exactly is keeping Sidney Water from using an off-the-shelf product for friggin' CRM?
I love this part (from your Sidney/Water CRM link):
"Once implemented, the project, which also has a second phase, bringing expenditure up to $68.9 million, is expected to reduce operating costs by $1.9 million a year."
So they should recoup their costs in about 35 years. Priceless (well, not really).
I worked for EDS for 9 years... they were barely able to keep their own internal CRM running. It was a nightmare. I sometimes wondered how the sales staff were able to hide the internal dysfunction so well. Practice I guess.
The judge noted in his judgment of the case that the Entire Agreement Clause failed to explicitly cover EDS from claims of negligent misrepresentation.
I guess I'm not really cut out to be a lawyer; I can't really imagine having the gall necessary to demand a clause in a contract protecting me from "negligent misrepresentation" ...
That's what I thought as well. Putting a clause like that in contract says to me, "It's possible we'll do this so badly you will sue us." I'm not sure I'd want to do business with a company like that.
This case result shows two things: IT suppliers’ sales teams must be more careful about their claims when they are trying to sell a system. Gone are the days when there was a disparity between what is sold and what is delivered.
Second, the liability cap is immaterial in fraud cases. EDS had a cap that it would not be liable for more than £30m worth of damages. But because Sky sued for fraud, the liability cap was rendered irrelevant.
What do you think?