BSkyB have won a fraudulent misrepresentation ruling against Hewlett-Packard.
In 2008 HP acquired software supplier EDS. Sky claimed that EDS had been deceptive in selling its Customer Relationship Management (CRM) system, EDS had described the system as being “proven leading-edge technology”. This was no the case and Sky argued that EDS had understated the time and cost needed to implement the CRM system.
The deal with Sky was worth £48 million and was signed in 2000. It was not long after the agreement was made that the relationship between the two companies broke down.
EDS countered Sky’s arguements by stating that Sky were not clear in stating their requirements and repeatedly made changes to the same thus making it difficult for EDS to fulfill the agreement.
Usually in a claim for misrepresentation (negligently) you would look to the contract which if drafted competently would have a limit of liability. Where there is a fraudulent misrepresentation however there is no such limit. This can be seen in the fact the Sky claimed damages of £700 million even though the contract was only worth £48 million.
HP released the following statement:
‘This is a legacy issue, dating back to the EDS business in 2000, which HP inherited when it acquired EDS in 2008. We are pleased the Court dismissed the majority of the allegations made. While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB. HP will be seeking permission to appeal…as the worldÕs largest technology company, HP has built a solid reputation based on strong governance and adherence to the highest ethical standards.’
Sky needless to say had a very different reaction:
“Mr Justice Ramsey found that EDS had lied to Sky in order to secure a contract as part of the company’s investment in a new customer relationship management system…Sky anticipates that EDS will be liable to pay Sky an amount of at least £200m.”