Watford ruling will end queue for the courts

Avoiding costly litigation will be easier as a result of the recent Court of Appeal decision in Watford Electronics v Sanderson...

Avoiding costly litigation will be easier as a result of the recent Court of Appeal decision in Watford Electronics v Sanderson CFL, said Fran Davie, a partner at DLA, who acted for Sanderson.

Ross Bentley

Last month, the Appeal Court ruling supported the enforcement of limited liability clauses in IT contracts. In earlier cases companies pursuing IT suppliers in the courts had used the Unfair Contract Terms Act (1977) successfully to overturn limited liability clauses to boost their claims for damages.

Companies considering litigation over IT disputes had already begun to think twice because of the Woolf reforms, which offer alternative means of resolution. The Court of Appeal's recent decision will "reinforce the trend to avoid litigating disputes", Davie said.

The outcome of the Watford case should mean that suppliers will, generally speaking, be in a much better position to defend claims, particularly where the contracts have been negotiated between commercial organisations of equal bargaining power and skill and by experienced businessmen.

Davie said, "The Court of Appeal's recent ruling could save suppliers significant sums of money in terms of legal fees, damages and insurance premiums.

Further savings will also be made in management time spent dealing with claims which can be a huge drain on valuable management time.

Although the case will clearly be welcomed by suppliers, it should also be welcomed by the industry as a whole as it should serve to discourage claims which might otherwise have been made, and that has to be good news."

Read more about the Appeal Court ruling in next week's Management section

ross.bentley@rbi.co.uk

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