BSkyB and EDS: When overcommitment comes home to roost

The case of BSkyB and EDS, decided last month in an English court, illustrates the perils of making promises you can't keep. The traditional "I'll catch 'em, you skin 'em" approach of sales teams, in which promises are given and representations are made during the sales process, only for them to be broken during the delivery phase, has landed EDS with a potential bill of £70million for costs, and damages somewhere between £200million and £700million.

The key issue in this case, which prevented EDS from being able to rely on its limit of liability clause, was that BSkyB was able to demonstrate that EDS had lied during the sales process, and that had it not lied, the contract would have been awarded to PwC.

Making claims that it knew to be untrue, specifically about its capability to deliver the project on time, was EDS's undoing. Had this not been proven, EDS would have been able to limit its liability to that set out in the contract, of £30million. It is now the job of HP, EDS's new owner, to push for an appeal.

What does this mean to you? Nothing new, if you exercise caution during the sales process, and are confident that your sales team steer clear of unfounded hyperbole. But if your organisation is ever tempted to say "Yes, we can!" when it is thinking "Well, we might be able to, with a following wind and favourable planetary alignment...", then it should carefully consider the consequences of failure. Although the huge costs and complexity of this case make it unlikely that other clients of failed projects will be rushing to follow in BSkyB's footsteps, the potential of unlimited liability should be sufficient to make vendors think twice before making representations that they are not truly confident in.