Limitation and exclusion of liability in a long-term IT contract

The DVLA entered into an agreement with PWC for the provision of IT consultancy services in 2002. PWC in turn entered into a subcontract with Fujitsu. IBM acquired PWC’s consultancy business and replaced PWC as party to the main contract and the subcontract.

Fujitsu brought proceedings against IBM, claiming that IBM had breached the subcontract including obligations of fiduciary duty and good faith, alleging that IBM had failed to allocate work to it as required by the subcontract and that it had failed to implement the contractual change control procedures. Fujitsu claimed that as a result it had lost revenue of approximately £36.8m. IBM denied breach and the existence of fiduciary and good-faith duties and also relied upon an exclusion clause that purported to exclude all of its liability for loss of profit/revenue in the event of breach.

Given that the effect of the exclusion clause would be to eliminate a significant element of Fujitsu’s claim for damages, the court decided to deal with this point and certain other issues on a preliminary basis at an early stage of the proceedings…

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