Tendering and Bid Problems

 

 

 

A recent high-profile case EDS v BSkyB, where an interim award of £200 million was made, has demonstrated the importance of following proper procedures when completing a bid, tender or informal pitch. Although few businesses risk this level of exposure, the judgment gives two clear warnings that businesses should take note of:

Check your tender and bid procedures are followed

Review your internal procedures, protocols and training to ensure that your sales representatives do not make statements during contract negotiations which cannot be backed up or delivered against. The dishonesty of one key employee (as in the EDS case) can have an extremely detrimental effect on your business.

Retain copies of your draft tender programme and resource allocations as they may help you demonstrate that (even if you were mistaken) you did not make a negligent or dishonest mistake.

Make sure that your business is insured against losses caused by the dishonesty of a senior employee. If you have insurance in place, consider what the effect on your business would be if an uncapped claim exceeded the level of cover available.

Check your entire agreement clause

An entire agreement clause is a contractual clause that aims to prevent the party relying on it from being liable for any statements (including pre-contractual statements) that are not included in the contract. A well-drafted entire agreement clause can exclude liability for any negligent (but not fraudulent) pre-contractual statements.

However, beware that this means that you cannot have side-letters, collateral agreements, informal assurances etc – everything must be set out in the contract.

Review your entire agreement clauses to make sure they exclude liability for any non-fraudulent statements. Liability for fraudulent statements cannot be excluded by contract.

If you would like to discuss any of the issues raised in this article please contact Alan Lodge on 024 7623 4205 or Helen Essery on 024 7623 4277.