IT Disputes - Better Contracts Will Save You Money

 

On my previous blog, I talked about IT disputes and how they occur.

This blog advocates that you spend enough time on the preparation of your contracts so that they are properly negotiated and drafted.

Trying to save legal fees in relation to preparing your contracts (perhaps by rushing through the contract without considering or negotiating contractual clauses properly) can be a false economy.

This is because if a dispute or litigation arises then your contract will be what you are relying upon – if you have rushed your contract or not really taken enough time to ensure that it accurately reflects the deal then you might find that your contract does not have all of the contractual protections that you would normally expect to have.

Further, the legal costs that you might incur in relation to a dispute or litigation are likely to far outweigh the amount it would have cost in legal fees to have had your contract properly negotiated and drafted.

There are a string of IT disputes including:

BskyB v EDS

DeBeers v ATOS Origin

Pegler v Wang

GB Gas Holdings v Accenture

BMS Computer Solutions v AB AGRI Ltd

The problem with IT disputes from a commercial point of view is that as soon as they arise you can be pretty certain that a few things will happen. These will include:

1. lawyers will become involved (sooner or later).

2. your relationship with your supplier will probably become strained

3. you and the supplier might become focussed on the dispute rather than on the supplier providing excellent service to you

4. the dispute will absorb time, effort and resources where each party may think that this time, effort and resources is for no tangible gain 

I agree that legal costs can rise as the contract is negotiated and drafted. However, I think that you should see this as an investment such that a well drafted contract leaves less room for there to be any disagreement between the parties regarding the deal. Hence, this leaves less room for there to be a dispute or litigation which, in turn, reduces the chances of you having to pay for lawyers to get involved in any dispute or litigation. As soon as a dispute or litigation arise then the legal fees can escalate rapidly without any real limit because it will be unclear as to how long the dispute will continue for and when and how it might be resolved.

In short, at least when you are having your contract drafted, you have some control over the legal fees and can contain the legal costs of the drafting and preparation of your contract whereas in litigation the legal costs will be very difficult to control.

jdesai@beachcroft.com

 

  

 

 

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