Sky’s the Limit for Salesmen

February 4, 2010

If the salesman from a kitchen refit company came round and told you that your kitchen redesign would take four days, you’d add the number you first thought of and double it – and then feel you had some idea of how long it would {i}really{/i} take. If you order a new car and the salesman tells you to expect it in four weeks, you start hoping after three and are not in the least surprised when it takes eight. If you buy a parrot and it turns out to be dead but nailed to the perch, you are not entirely surprised. So most ordinary people are going to look at {i}BSkyB v EDS{/i} and wonder how Sky could ever have believed the wild estimates on timing that they were told in the first place: ‘the {i}sales{/i} team promised? And you relied on that– yeah, right’. Many would probably have advised BSkyB to contact Ann Robinson’s Watchdog team and have then moved on to the tale of their granny and the crooked roofer.

But, just as the rich are different, so are multi-million pound contracts. You expect professional approaches to contract negotiation. You expect potential suppliers to make only solid and responsible representations. What BSkyB v EDS shows is that you can expect what you like – sometimes you’ll meet with a supplier with the ethics of a crooked roofer.

I have noted a reaction to the judgment that suggests that it’s really not all that worrying for suppliers. After all, it is not every day that you get a sales team led by a man lying about an MBA (with grades exceeded by those obtained by opposing counsel’s dog) and it would seem, in the trial judge’s clear view, lying about pretty much every other relevant issue too. But it is worth reflecting that Joe Galloway was a senior EDS employee, no less than MD of the relevant part of the EDS business; he did not get where he was without having sealed a few previous deals, and big ones too. He knew that his success depended on securing big contracts. And, while sales teams will no doubt often hear colleagues tell them that they were right to pull out and not promise too much, nobody ever became an MD by wisely failing to secure contracts.

My feeling is that the judgment in {i}BSkyB v EDS{/i} really is much more important in practice than has been generally acknowledged – a feeling reinforced by some visible wriggles of discomfort among quite senior sales people of my acquaintance. The lines between a positive, optimistic view (entirely defensible and probably set fast in the DNA of any successful salesman), a gloss (acceptable), a spin (danger signs) and a big fat lie (disaster) are not always as clear as in this case.

The partial success in the claim for fraudulent misrepresentation will reawaken interest in litigation based on fraudulent misrepresentation – often an approach dismissed by lawyers as just too hard to prove. Where once lawyers attacked the cap on damages by reference to UCTA or on some more desperate basis, they will start looking at the gap between promise and reality and examining the life of the leader of the sales team. Since litigation on such a basis raises issues beyond the money, settling will get harder. It could be that {i}BSkyB v EDS{/i} will be a victory for litigators everywhere.

There is a special opportunity to assess the impact of the case at an SCL London Group Meeting on 8 March. The meeting ‘{b}BSkyB v EDS: when does selling become fraud? The real lessons to be learned{/b}’ has Jeremy Storey QC and Peter Messer among the speakers. SCL and Intellect members pay £29.38, non-members £47.00. If you would like to attend this meeting, please email