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Refusing to Perform May Repudiate the Contract : De Beers v Atos Origin

DATE: 18.01.2011

In December 2010, the English High Court handed down judgment in a dispute between  De Beers UK Limited (“De Beers”) and Atos Origin IT Services UK Limited (“Atos”). While the decision does not change the laws of Ireland and is not binding on Irish courts it would likely be of persuasive effect before an Irish Court.

Atos had been contracted to provide supply-chain management software to De Beers. The contract did not progress well and the Judge was highly critical of both parties’ conduct. De Beers failed to provide senior staff with sufficient time commitment to Atos and changed the scope of the project. In addition, a confidential obstacle, which De Beers were not prepared to disclose, was preventing any potential rollout of the software. Atos failed to appreciate the complexity of the project and did not appear to commit sufficient experienced staff to the project.

Ultimately, the parties engaged in correspondence, after De Beers withheld a milestone payment due to Atos’ unsatisfactory performance of the contract. In correspondence, Atos threatened to cease performance of the contract, unless the contract was renegotiated. On the day of the threatened deadline, De Beers removed security passes from the Atos staff. Both parties claimed the other had repudiated the contract. The Judge found that Atos had repudiated the contract as they were willing to complete the project, but not the contract as it was currently formulated. However, the conduct of De Beers, particularly with regard to the confidential obstacle, significantly reduced the damages awarded to De Beers, who ultimately recovered £1.4 million from a claim of £8.68 million.

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