Logistics Providers - Be Careful How & What You Sell
08/06/2010
Lindsay Ellis, Head of the Logistics Sector Group and a partner at leading Law firm Wright Hassall LLP gives the following cautionary note to service providers in the Logistics sector.
A recent High Court judgement ruled against the service provider in the case of BSkyB Ltd v. HP Enterprise Services Ltd.
Whilst involving an IT project (which as an understatement did not go well) there are aspects of the case which have a broader impact and need to be borne in mind by those involved in any aspect of pre-contractual discussions and/or contractual negotiations for the provision of a service – Logistics included.
In its judgement the court was particularly critical of the way in which the ‘mastermind’ behind the supplier’s proposal had estimated the time required to undertake the project; specifically, the approach having been that of giving a date which the customer was seeking (as opposed to properly determining the extent of effort required). Of course, such a conflict often arises: the need to meet a client’s expectations (particularly during the ‘sales’ phase whilst properly determining the effort (and cost) involved is not always easy to reconcile.
In summary (the judgment is some 468 pages long):
- whilst not new law, the court’s decision confirms that it is not possible to exclude or limit liability for a fraudulent misrepresentation made during the sales process.
- a contract clause seeking to limit the contract to the provisions in the contract as opposed to including pre-contractual statements will not necessarily prevent a claim for negligent misrepresentation made during the pre-contract sales process.
- again, whilst not new law but of importance to all suppliers, the judgment shows that the acts of a single individual can give rise to a finding of fraud (with very damning consequences).
On a practical note, the judgment highlights the importance of having appropriate controls and internal risk management procedures in place with regard to both the sales and contracting processes. This is not specific to the IT industry and clearly has as much application to those operating in the Logistic Sector as it does to any other business.
Gideon Hillman Consulting and Wright Hassall Logistics Sector Group work together with Logistics Service Providers to ensure that their sales and business development processes and solution development teams work in harmony and that customer demands are met within the scope of the providers capability and contractual obligations.
For further details on how this highly experienced team can provide combined support to your business please contac Gideon Hillman Consulting.
