Table of secondary legislation
PART A OUTSET – BIRTH OF A TECHNOLOGY PROJECT
A SELECTION OF CONTRACTING PARTY 1.01
B PRE-CONTRACTUAL DOCUMENTS 1.06
i Statements of requirements/invitations to tender 1.06
ii Tenders 1.14
iii Letters of intent 1.21
a ‘Non-binding’ letters of intent 1.25
b Agreements to negotiate 1.27
c Potential binding terms 1.31
d Binding letters of intent 1.33
iv Estimates 1.34
a A cautionary tale: time estimates in the BSkyB case 1.37
b A contrast: cost estimates in the BSkyB case 1.40
c Lessons for suppliers 1.44
d Lessons for customers 1.49
2 LIABILITY FOR PRE-CONTRACTUAL STATEMENTS
A CONTRACTUAL LIABILITY 2.02
B MISREPRESENTATION 2.04
i The meaning of the statement 2.06
ii Actionable statements 2.08
iii Non-disclosure 2.15
iv Representation by conduct 2.17
v Statement to the claimant 2.18
vi Intention 2.19
vii Inducement 2.20
viii Fraud 2.21
ix Corporate defendants 2.25
x Negligent misrepresentation 2.31
xi Misrepresentation Act 1967, section 2(1) 2.32
xii Negligent misstatement 2.34
C REMEDIES 2.35
i Rescission ab initio 2.35
ii Damages 2.41
3 CONTRACT NEGOTIATION AND PROJECT METHODOLOGY
A INTRODUCTION 3.01
B DEVELOPMENT MODELS: WATERFALL OR AGILE 3.05
C OTHER PRE-CONTRACT CONSIDERATIONS AND ACCEPTANCE OF TENDER 3.19
i Dispute resolution provisions 3.19
ii Internal inconsistencies 3.20
iii Failure to complete the drafting process: starting work without a signed contract 3.21
iv Agreement on essential terms 3.27
v Incomplete agreements 3.33
vi Conditionality: requirement for a formal contract 3.36
vii Acceptance of tender 3.40
PART B NURTURING, MAINTAINING AND DELIVERING THE PROJECT
A OVERVIEW 4.01
B STATEMENT OF WORK 4.07
C FUNCTIONAL AND DESIGN SPECIFICATIONS 4.09
D PROJECT PLANS 4.14
E IMPLICATION OF TERMS 4.16
i Implication as a matter of fact 4.17
ii Implication as a matter of law 4.21
iii Software: goods or services 4.26
A RISKS AND CONSEQUENCES OF NOT ADHERING TO CONTRACTUAL TERMS 5.02
i Breach of contract 5.02
ii Estoppel 5.08
a Estoppel by convention 5.08
b Estoppel by representation and promissory estoppel 5.10
c ‘Contractual estoppel’ 5.14
iii Waiver 5.16
a Use of the term ‘waiver’ 5.16
b ‘No waiver’ clauses 5.17
iv Acquiescence 5.19
v Variation 5.21
a Requirements at common law 5.21
b Contractual requirements 5.27
c Variation or rescission? 5.33
vi The giving of notices 5.38
a Notices ‘in writing’ and by email 5.40
b Contractual notice requirements 5.44
c Notices containing errors 5.52
d ‘Reasonable notice’ 5.57
A COOPERATION BETWEEN SUPPLIER AND CUSTOMER 6.01
B RESOURCING THE PROJECT THROUGHOUT ITS TERM 6.10
C MANAGING THE EVOLUTION OF PROJECT REQUIREMENTS 6.18
D DUTIES OWED BY A CONSULTANT 6.23
E CHANGE CONTROL 6.24
i Changes in scope 6.24
ii Change control processes 6.27
a Change requests 6.27
b Assessing the impact and cost of the change 6.29
c Approval 6.30
d Recording changes 6.32
F RECORD MAINTENANCE 6.34
i Types of ‘document’ 6.36
a The contract 6.40
b Drafts and negotiation materials 6.42
c Minutes of meetings and notes of calls during the project 6.44
d Other categories of documents 6.46
ii Document retention following completion of the project 6.48
A REASONABLE/BEST ENDEAVOURS 7.01
i ‘Reasonable’ and ‘all reasonable’ endeavours 7.07
ii Best endeavours 7.12
B PRIME AND SUBCONTRACTING 7.17
C LICENSING 7.22
D CONTRACTUAL INDEMNITIES 7.28
A OVERVIEW 8.01
B BUG TOLERANCE 8.05
9 OTHER ASPECTS OF PERFORMANCE
A BENCHMARKING 9.01
B SERVICE CREDITS 9.05
i Background to service levels and service credits 9.05
ii Negotiating service levels and service credits 9.10
iii How are service levels to be defined? 9.13
iv How will service credits be structured/applied? 9.19
v An exclusive remedy? 9.24
vi Is a customer’s exercise of a service credits regime constrained by the common law? 9.25
vii Impact of the law on penalties/liquidated damages upon service credits 9.28
viii If it applies, how does the law on penalties apply to service credit regimes? 9.31
ix Practical steps in operating service credit regimes 9.34
A INTRODUCTION 10.01
B TIME FOR PERFORMANCE 10.03
C BREACH 10.08
D TERMINATION AT COMMON LAW 10.10
E PREVENTION PRINCIPLE 10.17
PART C IN SICKNESS AND IN HEALTH – THE AILING PROJECT, INTERIM DISPUTE RESOLUTION AND RESUSCITATION
A INTRODUCTION 11.01
B PRESERVING TIME FOR NEGOTIATION 11.08
C COMMON APPROACHES TO PRESERVING TIME AND RESOLVING DISPUTES MID-PROJECT 11.13
i De-scoping 11.13
ii Use of heads of terms to record ‘in-project’ dispute settlement 11.17
D STANDSTILL AGREEMENTS 11.23
i Suspension of rights and agreements not to sue 11.26
ii Cessation of work 11.38
iii ‘Time-bar’ considerations 11.48
iv Other losses of rights 11.56
v Steps required to effect a standstill 11.58
vi Standstill agreements: common issues 11.62
vii Potential benefits of a standstill agreement 11.68
E STEP-IN RIGHTS 11.71
12 REPRESENTATIONS WHEN RE-BASELINING
A INTRODUCTION 12.01
B RELIANCE 12.06
C A REAL LIFE ILLUSTRATION OF ALLEGED MISREPRESENTATION DURING RE-BASELINING: THE BSKYB V EDS LITIGATION 12.10
A EXPRESS TERMINATION RIGHTS AND CURE PROVISIONS 13.01
i Termination for convenience 13.03
ii Options to terminate on occurrence of specific event 13.06
iii Termination for cause 13.07
a Material breach 13.12
b Failure to make payments 13.20
c Licensing 13.24
d Other clauses: any breach and substantial breach 13.27
iv Remediability 13.39
B COMMON LAW TERMINATION: REPUDIATORY BREACH 13.47
i The common law and its interaction with the parties’ agreement 13.47
ii Identifying repudiatory breach of a technology project contract 13.55
C PRESERVATION OF TERMINATION OPTIONS 13.70
i Election, acceptance and affirmation 13.70
ii Other losses of rights: party in breach takes remedial action 13.82
iii ‘Cooperative contracts’; impact of termination rights 13.86
D RESERVING RIGHTS 13.89
i Reserving rights generally 13.89
ii Interrelationship of affirmation and ‘no waiver’ provisions 13.90
E PRACTICAL IMPLICATIONS 13.95
i Operational issues 13.95
ii Suspension of work 13.97
F TERMINATION PROCEDURES 13.102
G EXIT CLAUSES AND IP TRANSFER 13.107
A INTRODUCTION 14.01
B ROLE OF CONTRACTUAL GOVERNANCE AND ESCALATION PROCEDURES: SETTLEMENT CONSIDERATIONS 14.03
i Settlement vs independent ruling 14.04
ii What impact is the dispute having on the project? 14.05
iii How many parties are (or may be) involved in the dispute? 14.08
iv Do the other parties’ interests align? 14.12
v Are the parties concerned to keep the dispute confidential? 14.13
vi Can a clear assessment be made of potential liabilities if the dispute progresses to trial, final arbitral hearing or other forum outside of the parties’ control? 14.16
vii What resources will be needed to progress the dispute? 14.19
viii What is the state of the relationship between the contracting parties? Does the importance of the dispute mean that it must be resolved immediately, even if settlement is impossible? 14.21
ix Is settlement a useful pretext to agree wider changes to the project? 14.24
x Practical considerations if settlement is pursued 14.26
xi When should settlement be proposed? 14.27
xii Identifying all relevant parties 14.29
xiii Who will conduct the settlement negotiations? 14.33
xiv What is the forum for settlement negotiations? 14.37
xv Will negotiations be ‘without prejudice’? 14.38
xvi ‘Without prejudice to a party’s position’ vs without prejudice privilege – what is the difference? 14.56
xvii What are the substantive terms of settlement? 14.58
xviii Are all actual and contingent liabilities being settled? 14.60
xix Are obligations under the settlement agreement intended to be conditional? 14.64
xx Do the parties intend only to compromise part of the dispute? 14.66
xxi What enforcement mechanisms do the parties intend should be available in the event that the settlement agreement is breached? 14.68
xxii Other effects on the existing contract 14.70
C Preserving claims: potential pitfalls 14.73
i Scope of the reservation of rights: are some matters being settled, while the parties seek to preserve rights in respect of other matters? 14.75
ii Is there a risk of waiver of accrued rights? 14.77
iii Waiver by estoppel 14.79
iv Waiver by election 14.81
v Time-bar 14.83
vi Limiting risks of loss of rights 14.84
A ESCALATION CLAUSES 15.02
i Introduction 15.02
ii Common structures 15.05
iii Advantages and disadvantages of escalation clauses 15.11
iv Enforceability 15.31
v Drafting considerations 15.47
vi Further considerations at the mid-project stage 15.50
B DISPUTE BOARDS 15.51
i Overview 15.51
ii Advantages and disadvantages of dispute boards 15.70
iii Case law relating to dispute boards 15.79
16 ENFORCING A CONTINUING RELATIONSHIP
A DECLARATION 16.02
B INJUNCTION AND SPECIFIC PERFORMANCE 16.04
C FINAL INJUNCTION 16.10
D INTERIM INJUNCTION 16.14
i Prospects of success 16.15
ii Adequacy of damages 16.17
iii Balance of convenience 16.28
iv Undertaking as to damages 16.31
v Mandatory injunction 16.32
vi Prevention of termination 16.39
E SPECIFIC PERFORMANCE 16.51
F DISCRETION 16.54
PART D QUANTIFICATION OF CLAIMS FOR COMPENSATION
17 QUANTIFICATION OF CLAIMS FOR COMPENSATION
A INTRODUCTION 17.01
B DAMAGES FOR BREACH OF CONTRACT: GENERAL COMMENTS 17.06
i Introduction 17.06
ii The compensatory principle 17.09
iii Contractual or liquidated damages 17.14
a Primary vs secondary obligation 17.18
b The test of whether something is a penalty clause 17.20
iv Damages on the wasted expenditure basis 17.27
v The claimant’s choice, and the overlap between lost benefit and wasted expenditure claims 17.33
vi Burden and standard of proof, causation and remoteness 17.36
vii A ‘trap’ for the unwary? Termination clauses 17.42
viii Losses suffered within a group of companies 17.43
C DAMAGES ON THE LOST BENEFIT BASIS 17.50
i Difference in value 17.53
ii Cost of restoration: repair and replacement 17.58
iii Overlap between damages and cost of mitigation 17.62
iv Cost of a replacement system as reasonable mitigation of continuing losses 17.63
v Examples of recovery of the cost of a replacement system 17.69
vi Loss of future profits 17.78
vii Anticipated savings 17.86
viii Additional out of pocket expenditure 17.95
ix Additional or ‘wasted’ staff time 17.97
x Preservation of customer goodwill 17.104
xi Effect on loss of benefit damages of a right to terminate for convenience 17.105
D DAMAGES ON THE WASTED EXPENDITURE BASIS 17.108
i Monies paid to supplier 17.109
ii Out of pocket expenditure, consultants’ fees and wasted staff time 17.115
iii Damage to existing business 17.116
iv Mitigation 17.117
v Savings from alternate system 17.118
E SUPPLIER’S CLAIMS 17.119
F GLOBAL CLAIMS 17.120
i Factual basis 17.124
ii Loss not incurred ‘in any event’ 17.127
iii Matters for which the defendant is not responsible 17.130
iv Separating claims 17.132
G DAMAGES ON THE TORTIOUS BASIS 17.137
i Misrepresentation in technology projects 17.139
ii Damages for fraud 17.143
iii Concurrent claims in contract and tort 17.147
H PARTICULAR CHALLENGES WITH LONG-RUNNING DISPUTES 17.148
i Technology develops beyond the contracted solution 17.148
ii Retaining a legacy system for baselining 17.161
I ENFORCEMENT OF CONTRACTUAL INDEMNITIES 17.164
i Indemnity as a debt claim 17.164
ii Indemnity following breach of contract 17.174
iii Claims under an indemnity for losses which would otherwise be too remote 17.180
iv Is the indemnified party required to mitigate its losses? 17.189
v Other limitations 17.193
J MITIGATION – PRACTICAL STEPS 17.198
i Overview 17.198
ii Hardware 17.200
iii Software 17.202
iv Other actions 17.207
v Overlap between mitigation and repudiatory breach 17.209
18 EXEMPTION/LIMITATION CLAUSES
A INTERPRETATION 18.04
B DELIBERATE BREACH 18.08
C EXCLUSION OF LIABILITY FOR CONSEQUENTIAL LOSS 18.13
D CONTRA PROFERENTEM 18.16
E THE UNFAIR CONTRACT TERMS ACT 18.20
PART E CONDUCTING TECHNOLOGY CONTRACT DISPUTES
19 FORUM FOR RESOLVING DISPUTES
A The civil court system 19.02
i Pre-action 19.13
ii Initial procedural timetable 19.18
iii Designation of judge 19.21
iv Case management conference and procedural matters 19.22
B Arbitration 19.24
C Mediation 19.28
i Structure of mediation 19.32
ii Benefits of mediation against non-facilitated negotiation 19.43
iii Choosing a mediator: industry expert or lawyer 19.47
iv Interim mediations: impact on ongoing project 19.53
D Expert determination 19.57
i The expert determination clause 19.60
ii Naming the expert 19.65
iii Defining ‘technical disputes’ 19.69
iv Reasoned decisions 19.72
v Challenging the decision 19.75
vi Enforcement 19.81
vii Impact on an ongoing project 19.82
A Introduction 20.01
B Solicitor’s overriding duty to the court 20.05
C Document preservation 20.10
i When should document preservation first be considered? 20.11
ii Key steps in the preservation of documents 20.15
iii The ‘document hold’ notice 20.19
iv Potential consequences if disclosable documents are destroyed 20.25
v Electronic disclosure 20.28
a Electronic data 20.31
b Electronic Documents Questionnaire (EDQ) 20.35
c E-disclosure in cases before the Technology and Construction Court (TCC) 20.42
d Types of electronic documents 20.46
e Storage media 20.47
f Encryption 20.48
g Third-party suppliers of eDisclosure services 20.51
h Review 20.53
D. Common practical issues with inspection 20.59
i Documents inaccessible/unreadable without specialist equipment and facilities 20.60
ii Maintaining confidentiality of disclosed documents 20.62
iii Demonstrations and access to working examples 20.65
A Witnesses of fact 21.01
B Expert witnesses 21.06
i Practicalities 21.07
ii Role and duties of the expert 21.11
iii Instructing experts 21.18
a Guidance 21.18
iv Substitution of experts 21.21
