what's in the news

The Court of Appeal has just upheld the first instance decision in GB Gas Holdings –v- Accenture.  GB is a trading company owned by Centrica.

The case concerned a defective IT system known as Jupiter, appropriately enough since Jupiter is a gas giant. Like the name suggests, everything about this case was of gigantic proportion. If you issue 5 million bills a month, as Centrica do, then an automated billing system is more than just a good idea. It was, as the Court found, of critical importance to Centrica.

The system had defects (and an interesting discussion for another day is that the Court of Appeal accepted that a series of material breaches of the same provision of the agreement could amount to a fundamental breach).  The automated billing system generated, for example, up to 18 million unnecessary exceptions in December 2007 – meaning the automated billing to a customer was suspended and required manual intervention.

The case is interesting because Accenture had sought by the contract to exclude “indirect or consequential” loss.  The High Court had held that major claims by Centrica were direct losses resulting from the defective system even though Accenture argued that they were indirect.  Compensation payable to customers, gas distribution charges payable to Centrica’s suppliers, additional borrowing charges and even stationery and correspondence costs in updating customers were all held to be direct losses.  The Court of Appeal upheld the High Court’s decision and it is particularly notable that ex gratia payments to customers caused by Accenture’s failure to supply the billing system were not regarded as indirect losses either.

Why does this matter?  Contracts often seek to exclude indirect or consequential loss and this case highlights the risk that even such a provision may not catch the types of loss that the parties might have expected.  Maybe it is time to bite the bullet, as some have been suggesting, and adopt a more modern style of drafting by setting out clearly what losses are, as well as those which are not, intended to be recoverable in the event of a breach of the terms of the contract.  That is of course if the parties can bring themselves to consider a breach and what the consequences are likely to be.

For further information relating to the services provided by Pitmans, please visit the Pitmans Dispute Resolution website or contact our team direct.

Tim Clark 
tclark@pitmans.com
+44 (0) 118 9570 264

Widely recognised as the leading multi-category awards scheme and the only event to cover the whole of the Thames Valley, this is a date on the calendar not to be missed.  This year’s awards takes place on Thursday 18th November at the Royal Berkshire Conference, Madejski Stadium, Reading, with Guest of Honour the Rt Hon Lord Paddy Ashdown, former leader of the Liberal Democrats and now a mentor to Nick Clegg.

Attended by the cream of the region’s business community, the glittering black-tie evening applauds and celebrates success.  From some of the best known corporate names to small and medium sized enterprises who have succeeded in their chosen fields, it is a time to reward entrepreneurial spirit, to gain recognition among your peers and say a very special thank you to staff and customers alike.

The search is on to find the Thames Valley Business of the Year, with the award open to every company in the area.  It recognises not only profitability, innovation and employment but also the contribution made to the local economic community and the provision of support to culture and charities in the region.

Pitmans is proud to sponsor the Thames Valley Business of the Year Award, with managing partner Christopher Avery advising what companies should be doing to impress the judges:

“Our award is different because we’re looking for those companies which fulfil criteria across four clear sectors – financial success, employees, innovation and impact on the local community.”

“That means a company which might be doing very well in terms of profit, but doesn’t take any form of social responsibility, won’t be the one the judges vote for.  Our winner doesn’t have to be the biggest company, or from any particular sector, but it does have to show us it takes an all-round approach and has a real passion for what it is doing.”

“Of course, we want companies which are successful and can demonstrate entrepreneurial spirit and innovative ideas, but it’s also important that they look after their staff and provide support to the local community – either in the shape of charitable works or through cultural events.”

Pitmans has sponsored the Business of the Year category since the awards began in 1994 and top names who have walked away with the trophy in the past include Sun Microsystems, Connells, 02 (UK) Barracuda and Drive Tech. Last year’s winner was SDL, who were winners in 2007 as well.

Award Categories:

Dynamic Business Of The Year (sponsored by Deloitte)
Business Management Team (sponsored by The Royal Bank of Scotland)
SME Of The Year (sponsored by James Cowper)
Best Company To Work For Award (sponsored by Vail Williams)
Thames Valley Export Award (UK Trade & Investment)

Closing date for entries is 30 September 2010. For more information, please visit http://www.businessawards.co.uk/