Clifford Chance
Dos and Don'ts when an IT Project is in difficulties
11 March 2011
A recent English High Court decision, De Beers UK v Atos Origin IT Services
UK Ltd [2010] EWHC 3276, provides guidance on addressing issues that may
arise when an IT project is in difficulties and what negotiating ploys may or may
not be permissible. For a supplier to demand that a contract be repriced on the
grounds of "scope creep" and to suspend work when that repricing was not
forthcoming, was not permissible. The supplier's conduct amounted to a
repudiatory breach leading to termination of the original contract, for which the
supplier was held liable in damages in the amount of the cost of procuring a
replacement system. On the other hand, a customer temporarily withholding
payment of a £300,000 invoice in order to gain a bit of leverage in discussions
was (in the circumstances) not a repudiatory breach: provided it was combined
with other behaviour which demonstrated a willingness to continue performing
its contractual obligations.
