Belinda Doshi Partner, Field Fisher Waterhouse LLP - - PowerPoint PPT Presentation

Latest trends and cases in procurement

Belinda Doshi Partner, Field Fisher Waterhouse LLP Belinda.Doshi@ffw.com +44 (0) 7976 351553

18 May 2011

Overview

• Latest trends
• Fall out from BSkyB v EDS (2010)
• Other latest ‘must know’ cases
• Where next?

• Cautious rise in confidence
• New financial year – new budgets
• Financial services – first into the crisis – first out
• Insurance and Solvency II
• Value is still ‘the new black’
• Good procurement practice has never been so

important

Latest trends: (1) green shoots?

Latest trends: (2) flexible contracting

• Number one trend
• Decline of the monolithic services contract
• One provider does not have all the solutions
• Reluctance to lock-in for long term
• Scalability of service and service recipient
• Future flexing
• COTs and Cloud
• Impact on contracting models
• The rise of the flexible framework and non-exclusivity

Latest trends: (3) privacy and data security

• Sony
• Rise of privacy and data security as key customer concern
• Not just a compliance issue – branding and reputation
• Importance of building into contracts
• Do your contracts reflect your privacy and security policies?
• Breach notification and remedial action
• How secure are your suppliers?
• The data security of your supplier chain is only as strong as

the weakest link

Latest trends: (4) supplier consolidation

• Multi-sourcing malaise
• Multiple contracts, multiple costs?
• BP as a case study
• Greater flexibility/collaboration requires more consolidation
• Data security and impact on supplier base
• Opportunity to renegotiate
• Don’t move, improve
• Contract consolidation

Latest ‘must know’ cases

• Landmark case on fraud and liability
• Supreme Court on “subject to

contract”

• Battle of the forms
• Termination

Landmark case: BSkyB v EDS (2010)

• Landmark case
• £740 million claim for fraudulent misrepresentation
• Failed CRM/contact centre system and services
• Fraud: limitation of liability does not apply
• Court found in BSkyB’s favour
• What it means for suppliers
• What is means for customers

Supreme Court on ‘Subject to contract”

• RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co

KG (UK Production) 2010 – ‘The Müller Yoghurt case’

• When is a contract not a contract?
• And if it is a contract…what are its terms?!
• Letter of intent followed by an agreement ‘subject to contract’
• Work started with no written contract agreed
• Risks to the customer: waiver, quantum meruit, liability
• Court of Appeal: no contract
• Supreme Court: binding agreement
• Lessons for managing risks?

Battle of the forms

• GHSP v AB Electronics 2010 (High Court)
• Where each party states their terms apply, whose really do?
• Last shot doctrine – not always conclusive
• Court finding – neither Customers nor Supplier’s Terms

applied – Terms implied from SGA 1979

• Impact: Caps on liability in the Supplier’s contract did not

apply!

• Lessons for managing risks?

Termination

• Shell Egypt West Manzala GmbH and Shell Egypt West

Qantana GmbH v Dana Gas Egypt Limited 2010 (High Court)

• Mistake over termination: Shell failed to recover US$15million
• Dana Gas Egypt broke contract with Shell
• Shell used the contract terms to terminate giving 30 days notice
• Shell should have claimed this was a repudiatory breach and

rescinded contract

• Following the contract procedure = Shell affirming the contract
• Result: Shell failed to recover
• Lessons for managing risks?