Goodwill payments to customers can be a direct loss

IT suppliers should be concerned at a recent court case involving Accenture and Centrica. Accenture supplied a faulty billing system to Centrica.  This disrupted Centrica’s business and caused hassle to its customers. In order to keep its customers sweet, and although it had no contractual obligation to do so, Centrica gave its customers payments to compensate them for their hassle. Those payments added up to 8m!

Centrica tried to recover those customer goodwill payments from Accenture. Accenture resisted because it thought those losses were covered by a clause in the IT supply contract that said that Accenture would not be liable for indirect or consequential losses. 

Lawyers love a good bun fight over whether a loss is direct or indirect.   Believe it or not (and you probably will), the landmark case on the subject was decided back in 1854.   

There is a lot of complex law behind the judgement – but the headline is that the Court found that the goodwill payments were not “indirect or consequential losses”, and thus were not excluded by the clause. 

It’s not the end of the line for Accenture as the court was only looking at points of principle. It is still to decide whether Centrica can actually recover these payments on the facts of the case.

So if you are an IT supplier working in the utility or banking (or similar) sectors you may want to specifically exclude or cap liability for goodwill payments (also known as “ex gratia” payments) made by your client to its customers. 

Although the article was mostly written by Fiona Murdoch – one of our professional support lawyers.

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