• At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
  • Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
  • Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
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  • At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
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  • We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
  • Our legal professionals work alongside social media providers and users in relation to the commercial, privacy, data, advertising, intellectual property, employment and corporate issues that arise in this dynamic sector.
  • Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
  • Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
  • Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
  • Kemp Little is trusted by some of the world’s leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
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  • FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they don’t give away to get you started.

Allocating risk in IT contracts

The UK technology industry has been the crucible for cases involving the allocation of risk and liabilities in supply contracts, with particular focus on enforceability of liability caps and exclusions. This focus has in large part been a reflection of the complexity, value and increasingly strategic importance of technology projects. The outcome is that suppliers and customers need to take care when drafting and negotiating a technology or outsourcing contract to ensure that the terms dealing with liability are legally enforceable, and properly reflect the agreed allocation of risk between the parties.

The ability for suppliers to limit their liability for failed or delayed projects is restricted in the UK by a number of statutory frameworks. These include:

  • the Unfair Contract Terms Act 1977 (UCTA);
  • the Misrepresentation Act 1967; and
  • in business to consumer contracts, the Unfair Terms in Consumer Contract Regulations 1994.

This article focuses only on the statutory framework as it applies to business contracts.

The past fifteen or so years has seen a number of cases in the technology sector in which the courts in England and Wales have had to consider the enforceability of contract limitations and exclusions under UCTA. The courts’ approach to enforcing limitations and exclusions in these cases has over time moved away from what can broadly be described as an “interventionist” and “pro-customer” approach of the nineties and early 2000s[1] to a much greater reluctance to intervene in agreements reached between experienced commercial organisations, such as in the Court of Appeal’s decision in Watford v Sanderson,[2] and most recently the High Court’s preliminary ruling in Fujitsu v IBM.[3]

Despite this change in approach, the judgments in the cases of BSkyB v EDS[4] and Kingsway v Red Sky[5] and the noteworthy High Court decision in the NetTV[6] case, demonstrate the UK courts’ continued willingness to intervene to negate liability caps and exclusions, in cases where the supplier is found to have deliberately mis-sold or oversold its technology solution and/or its ability to meet the customer’s requirements, or in the case of NetTV, where the supplier has committed a deliberate repudiatory breach of contract.

This article summarises the key case law developments and considers the lessons that suppliers and buyers of technology can learn from them.

[1] St. Albans City and District Council v International Computers Ltd (1995) FSR 686; [1996] 4 All ER 481; and Pegler v Wang (UK) Ltd (2000) 70 Con LR 68.

[2] Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA Civ 317.

[3] Fujitsu Services Ltd v IBM United Kingdom Ltd [2014] EWHC 752 (TCC).

[4] BSkyB Ltd and another v HP Enterprise Services UK Ltd (formerly Electronic Data Systems Ltd) and another [2010] EWHC 86 (TCC).

[5] Kingsway Hall Hotel Ltd v Red Sky IT (Hounslow) Ltd [2010] EWHC 965 (TCC).

[6] Internet Broadcasting Corp Ltd (trading as NETTV) and another v MAR LLC (trading as MARHedge) [2009] EWHC 844 (Ch).