Prepare for contractual problems

IT managers can learn from the Co-op's and ICL's legal case

IT managers can learn from the Co-op's and ICL's legal case

Last year, judge Richard Seymour delivered his verdict in the software supply dispute between the Co-operative Group and ICL. There are valuable lessons IT directors can learn from this case that may help them avoid similar disputes or, if this should happen, what can be done to minimise the damage.


Ensure the contractual framework for a project is clearly defined (including specification, change control, testing, acceptance, payment, etc).

Both parties are exposed to serious risk if no written contract is agreed before starting work. If the project is urgent and work has to be started before details are finalised, consider an interim time-and-materials contract to deal with the basic ground rules as to payment and ownership of the work. Setting these rules at the outset is much easier than doing so after work has commenced and relations have become soured.

Once work is under way, ensure that the contract is adhered to or, if not, is varied in such a way as not to damage your position. Keep the contract to hand so that any issues such as scope creep or payment can be checked before committing to a particular action.


Before any project begins, warn your team of the need for care as to what they say in communications (internal or external), as it is likely that these will have to be handed over to the other party in any subsequent court action.

E-mails in particular can be frank, self-critical or even humourous, but few stop to think how embarrassing it would be if e-mails were read out in court.

Similarly, internal reports on a project or business relationship can be written with only a small circulation of readers in mind, but can be disclosable and used as ammunition against you in court.

If it is necessary to carry out such a report, consider doing so under the auspices of your in-house or external lawyers to maximise the chances of it being privileged and not disclosable in any subsequent court proceedings. Make sure a document trail records the project's progress in meetings, testing and implementation to back up your position.

Read the other party's communications to you as soon as you receive them. Challenge any inaccuracies straight away. You can still challenge them later, but it will look less credible and you will be asked why you delayed.


An early assessment of your case at the outset of any dispute, using legal or technical advisers, should enable you to carry out a cost/benefit analysis, identify the best outcome, consider the pathways (negotiation, mediation or litigation) and formulate a strategy.

The sooner this is done in any dispute, the more options there are likely to be and the better your prospects of obtaining a favourable result.

Bill Gilliam is IT litigation specialist at law firm Eversheds

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