“[FSL’s] claim has no real prospects of success. It ignores a contractual exclusion clause that specifically excludes liability for losses of the type that [FSL] seeks to recover. It also relies on fiduciary duties that IBM does not owe.”
“[FSL] has no direct means by which to ascertain what services are being requested or carried out under the PACT Agreement. [FSL] is therefore reliant on IBM to obtain work under the PACT Agreement, to notify it of such work and to sub-contract to [FSL] the shares of work to which it is entitled.”
“…. INTRODUCTION (A) DVLA is an executive agency within the Department and holds delegated powers to perform statutory functions on behalf of the SoS, including administering driver and vehicle licensing for Great Britain. (B) DVLA wishes to enter into an innovative strategic partnering relationship with a service partner for the ongoing operation and management of its existing and future requirements for IS/ICT services and a range of selected business services and the provision of any further services required by DVLA, other DVO Agencies, the Department, other associated bodies and agencies of the Department and any other government departments and their associated bodies……… (J) On the basis of the Proposal as further amplified by negotiations and on the basis of the Best and Final Offer, DVLA has selected PwC to provide certain services and PwC has undertaken to provide those services pursuant to the terms of an agreement of even date between DVLA and PwC (the “PACT Agreement”). (K) PwC wishes to sub-contract the Services, which comprise certain of the PACT Services, to Fujitsu and Fujitsu has agreed to provide those services to PwC on the terms of this sub-contract (the “Sub-Contract”)….. PART 1 OVERVIEW OF AGREEMENT …. 2. PARTNERING AGREEMENT AND SCOPE OF THIS SUB-CONTRACT PART 1 OVERVIEW OF AGREEMENT 2.1 PwC has agreed to work with the DVLA in a partnering relationship under the PACT Agreement. Fujitsu acknowledges that Fujitsu’s relationship with PwC pursuant to this Sub-Contract will directly impact upon PwC and DVLA’s vision and objectives set out in the PACT Agreement, as well as upon PwC’s partnering relationship with the DVLA under the PACT Agreement. Accordingly, Fujitsu and PwC shall comply with the partnering principles set out in Schedule 2 in the operation of their own partnering relationship and Fujitsu agrees to work together with PwC to support PwC to give effect to its partnering relationship with the DVLA as intended under the PACT Agreement, including but not limited to achieving the objectives set out in Annex 1 of Schedule 2 of this Sub-Contract... … 2.2 For the avoidance of doubt, Fujitsu shall provide all reasonably necessary assistance to PwC to ensure that PwC can give effect to the following: (a) provision of the Services identified in the PACT Agreement for the on-going support and operation of current DVLA processes. (b) the completion of existing work in progress, development and implementation of new processes and systems identified in the PACT Agreement to enable DVLA and other DVO Agencies to deliver improved customer service cost effectively and efficiently. (c) identifying and implementing through this Agreement business process change to support the achievement of DVLA’s and other DVO Agencies’ objectives and to support DVLA, other DVO Agencies and other Participants in the Government’s “Modernising Government” programme; and (d) identifying and implementing through the PACT Agreement business opportunities for the application of the assets and skills of DVLA, other DVO Agencies and other Participants for shared commercial and/or public service benefit in line with the Government’s “Wider Markets” programme. 2.3 The Parties acknowledge that the Services are provided by Fujitsu to enable PwC to meet certain of its obligations under the PACT Agreement….. 2.5 The Parties agree to comply with the governance provisions set out or referred to in Schedule 2 in relation to this Sub-Contract. … 2.7 Without limiting any other obligation imposed by this Sub-Contract, each Party shall co-operate with the other Party’s reasonable requests for assistance under this Sub-Contract by providing reasonable information, resources and facilities, so as to enable the other Party to comply with its respective obligations under this Sub-Contract, and to enable PwC to comply with its obligations under the PACT Agreement (provided that neither Party shall be obliged to incur any material cost or expense in providing any such assistance). 2.8 Committed Workshare 2.8.1 PwC and Fujitsu agree that it is their intention that Fujitsu shall be responsible for all infrastructure management, operation, support and maintenance services relating to the Technical Infrastructure (including the business applications) as such Technical Infrastructure changes from time to time which as at the Effective Date such Technical Infrastructure relates to the IS/ICT Services set out in Schedule 3 (“Infrastructure Services”). 2.8.2 Accordingly, to give effect to the intention set out in Clause 2.8.1 above, PwC agrees that, during the Contract Period, in relation to any additional Infrastructure Services or new services the nature of which are the same or substantially the same as the Infrastructure Services added, or proposed to be added, to the scope of services provided pursuant to the Prime Contract (“New Infrastructure Services”) subject to (i) Fujitsu’s compliance with the conditions set out in Clause 2.8.4 below, and (ii) the exceptions set out in Clause 2.8.5 below: (a) it will consult with Fujitsu in relation to any RFC, New Proposition or other request or proposal from or to DVLA in relation to proposed New Infrastructure Services; and (b) it will sub-contract to Fujitsu any New Infrastructure Services; (c) if the New Infrastructure Services relate to the on-going management or support of a new application developed by PwC under the PACT Agreement, PwC will ensure that Fujitsu will as a minimum be entitled to sufficient involvement in the development process to allow an effective transition to such New Infrastructure Services and to allow Fujitsu to effectively provide such New Infrastructure Services; and (d) without prejudice to Clause 2.8.2(b) above, the New Infrastructure Services shall be agreed in accordance with the Change Control Procedures, and the Parties acknowledge that any New Infrastructure Services subcontracted to Fujitsu agreeing the scope and description of such New Infrastructure Services and such agreed scope and description shall be added to Schedule 3 when agreed by the Parties. 2.8.3 In addition to the New Infrastructure Services set out above above [sic], PwC may commission other agreed services from Fujitsu. Such services may include (a) the application design, development (other than application design or development services provided under the Fund) and/or systems implementation (including coding and programming) and PwC acknowledges that Fujitsu will be entitled to sufficient involvement in the design or development process, as applicable, relating to such services to allow Fujitsu to effectively provide such services; (b) consultancy services provided in connection with the Technical Infrastructure; (c) any Technical Infrastructure that is not the same or substantially the same as the New Infrastructure Services that PwC may require Fujitsu to manage, operate, support, maintain and/or otherwise utilise to provide any new services for the DVLA; and (d) the procurement of any assets (hardware and software) either to replace or supplement the existing Technical Infrastructure or the New Infrastructure Services. Such services will naturally need to be mutually agreed and therefore (a) PwC is not obligated to commission such services from Fujitsu; and (b) Fujitsu is not obligated to provide such services to PwC; unless and until the parties have agreed to such services in accordance with the Change Control Procedure. The Parties acknowledge that any work commissioned by PwC under this Clause 2.8.3 may be added to Schedule 3 at PwC’s sole discretion. If PwC decides that such any work commissioned under this Clause 2.8.3 is to be added to Schedule 3, PwC will define the scope and description of such work and such scope and description will be added to Schedule 3 [Finance]… 6. CHARGES AND PAYMENT 6.1 The provisions of Schedule 13 [Finance] shall apply to this Sub-Contract. 6.2 PwC shall pay to Fujitsu the Fujitsu Payments for the provision of the Services… PART 3 REMEDIES AND EXIT 19. WARRANTIES….. 19.4 PwC warrants and represents that : … (f) it will discharge any obligations it has regarding the Services (to the extent applicable) and that PwC will supply and render appropriately experienced, qualified and trained personnel to discharge any obligations PwC has to the Services under this Sub-Contract, and that such personnel will discharge such obligations with all due skill, care and diligence in accordance with Good Industry Practice and any applicable Quality Management Systems” 20. INDEMNITIES AND LIABILITY… Limit of Liability ... 20.4 Subject to Clauses 20.6 and 20.8, PwC’s liability to Fujitsu arising under any indemnity or otherwise under or in relation to this Sub-Contract, whether in contract, tort, by statute or otherwise and whether or not arising from any negligence on the part of PwC or any of their agents or employees shall be subject to the following limits: …. c) subject to Clauses 20.4(d) and 20.8, in respect of any Claims or losses arising PwC’s aggregate liability to Fujitsu arising under this Sub-Contract in each Contract Year shall be limited to£5 million for all events or failures giving rise to such Claims or losses; d) notwithstanding the cap set out in Clause 20.4(c), PwC’s overall aggregate liability for all Claims or losses arising under this Sub-Contract shall be limited, subject to Clause 20.8, to£10 million for all events or failures giving rise to such Claims or losses. … 20.7 Neither Party shall be liable to the other under this Sub-Contract for loss of profits, revenue, business, goodwill, indirect or consequential loss or damage, although it is agreed that: (a) this Clause 20.7 shall not apply to exclude costs to PwC and other Participants of remedying failures and re-running activities, the cost of re-tendering, costs of engaging other providers in the case of Fujitsu failure, and cost of termination which would otherwise be recoverable from Fujitsu because they arose as a result of an event of default by Fujitsu (including its Sub-Contractors and Affiliates and their respective employees, servants and agents); (b) actual agreed revenue share may be recoverable to the extent expressly agreed between the parties; (c) loss of profits shall be recoverable only as specified in Schedule 13 (Finance) or as a basis which may be used for calculating damages payable for infringement of Intellectual Property Rights or breach of confidentiality claims; and (d) third party claims, including where a party has agreed to indemnify the other, shall be recoverable to the extent that the underlying third party claim results directly from a failure of the indemnifying Party, provided that this Clause 20.7(d) shall not be interpreted to make loss of profits recoverable in circumstances where under Clause 20.7(c), loss of profit would not be recoverable… 44. LEGAL RELATIONSHIP BETWEEN THE PARTIES 44.1 The Parties do not intend the Sub-Contract to create any partnership between them as a matter of law. Accordingly, nothing in this Sub-Contract or otherwise shall be held, implied or deemed to constitute a partnership, joint venture or other association between the Parties. 44.2 [FSL] shall at all times be an independent contractor and nothing in this Sub-Contract shall be construed as creating the relationship of employer and employee between the PwC and [FSL] or any of [FSL’s] employees… 44.5 Save as otherwise provided in this Sub-Contract, neither Party shall be or be deemed to be an agent of the other Party and neither Party shall hold itself out as having authority or power to bind the other Party in any way…….”
“Committed Workshare 2.8.1 The Parties have agreed that they will share work between them in accordance with the agreed workshare as set out in Schedule 23 to this Sub-contract which shall, in the event of any conflict between Clause 2.8 and Schedule 23, take precedence over any terms in this Clause 2.8. 2.8.2 IBM agrees that during the Contract Period, in relation to any additional Infrastructure Services or new Infrastructure Services added, or proposed to be added, to the scope of services provided in Schedule 3 (“New Infrastructure Services”) or such other services as may be agreed in accordance the provisions of Schedule 23 subject to (i) Fujitsu’s compliance with the conditions set out in Clause 2.8.4 and 2.8.6 below, and (ii) the exceptions set out in Clause 2.8.5 below: (a) it will consult with Fujitsu in relation to any RFC, New Proposition or other request or proposal from or to DVLA in relation to proposed New Infrastructure Services; and (b) it will sub-contract to Fujitsu any New Infrastructure Services; (c) if the New Infrastructure Services relate to the on-going management or support of a new application developed by IBM under the PACT Agreement, IBM shall ensure that Fujitsu shall as a minimum be entitled to sufficient involvement at each stage of the development lifecycle process to allow an effective transition to such New Infrastructure Services and to allow Fujitsu to effectively provide such New Infrastructure Services. To this extent, IBM shall wherever possible engage Fujitsu at the initiation stage of all such projects so as to agree the allocation of responsibilities, the review process and the deliverables of that project; (d) as part of Fujitsu’s involvement as described in 2.8.2(c) above, IBM shall provide and Fujitsu shall review and agree, such agreement not to be unreasonably withheld, those deliverables that have been agreed as needing Fujitsu’s review. Where Fujitsu is unable to agree the deliverable, the relevant project and service delivery representatives from each Party will meet, within 10 days of Fujitsu advising IBM of their concerns, to discuss and resolve the issue. Where the representatives cannot resolve the problem, IBM shall include details of Fujitsu’s issues in the deliverable under dispute in any deliverables presented to DVLA; (e) to ensure that the current and New Infrastructure Services are capable of being supported and managed by Fujitsu, IBM shall consult with Fujitsu on proposed modifications to existing and on new architectural strategies. Where Fujitsu cannot agree to a proposed modification or new architectural strategy, Fujitsu’s comments will be included by IBM in any deliverable presented to DVLA; and (f) without prejudice to Clause 2.8.2(b) above, the New Infrastructure Services shall be agreed in accordance with the Change Control Procedures, and the Parties acknowledge that any New Infrastructure Services subcontracted to Fujitsu under Clause 2.8.2 shall be added to Schedule 3 subject to IBM and Fujitsu agreeing the scope and description of such New Infrastructure Services and such agreed scope and description shall be added to Schedule 3 when agreed by the Parties. 2.8.3 In addition to the New Infrastructure Services set out above [sic]above, IBM may commission other agreed services from Fujitsu. Such services may include (a) the application design, development (other than application design or development services provided under the Fund) and/or systems implementation (including coding and programming) and IBM acknowledges that Fujitsu will be entitled to sufficient involvement in the design or development process, as applicable, relating to such services to allow Fujitsu to effectively provide such services; (b) consultancy services provided in connection with the Technical Infrastructure; (c) any Technical Infrastructure that is not the same or substantially the same as the New Infrastructure Services that IBM may require Fujitsu to manage, operate, support, maintain and/or otherwise utilise to provide any new services for the DVLA; (d) the procurement of any assets (hardware and software) either to replace or supplement the existing Technical Infrastructure or the New Infrastructure Services; and (e) the design, build, test and implementation of infrastructure and where possible such work will be commissioned on an end to end basis. Such services will naturally need to be mutually agreed and therefore (a) IBM is not obligated to commission such services from Fujitsu; and (b) Fujitsu is not obligated to provide such services to IBM; unless and until the parties have agreed to such services in accordance with the Change Control Procedure. The Parties acknowledge that any work commissioned by IBM under this Clause 2.8.3 may be added to Schedule 3 at IBM’s sole discretion. If IBM decides that such any work commissioned under this Clause 2.8.3 is to be added to Schedule 3, IBM will define the scope and description of such work and such scope and description will be added to Schedule 3 [Finance]…”
“70.1 By reason of IBM’s breaches of the workshare provisions referred to at paragraph 51 above (and/or by reason of IBM’s related breaches of its fiduciary or contractual duties referred to at paragraph 53 above) [FSL] has been deprived of services which it would otherwise have performed at a profit. [FSL] claims the sums it would otherwise have been paid for undertaking that work, and will give credit as necessary for any costs and expenses it would have incurred in doing so.”
“20…It is not in my judgment necessary to conclude that, unless the most natural meaning of the words produces a result so extreme as to suggest that it was unintended, the court must give effect to that meaning. 21. The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of constructions is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”
“The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.” d) however, “where the parties have used unambiguous language, the court must apply it” – see Rainy SkySA v Kookmin Bank (supra) at paragraph 23. There Lord Clarke placed reliance on Co-operative Wholesale Society Ltd v National Westminster Bank plc[1995] 1 EGLR 97 where a result, though most improbable, flowed from the unambiguous language of the clause, and so was applied; d) the apparent commercial purpose of a contract, as perceived by the court, cannot override the words of a contract where they are clear : “The surrounding circumstances and commercial common sense do not represent a licence to the court to re-write a contract merely because its terms seem somewhat unexpected, a little unreasonable, or not commercially very wise. The contract will contain the words the parties have chosen to use in order to identify their contractual rights and obligations. … Particularly in these circumstances, ... the court must be careful before departing from the natural meaning of the provision in the contract merely because it may conflict with [the court’s] notions of commercial common sense of what the parties may, must or should have thought or intended. Judges are not always the most commercially-minded, let alone the most commercially experienced of people and should … avoid arrogating to themselves overconfidently the role of arbiter of commercial reasonableness or likelihood…” – see Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2007] CILL 2449 at paragraphs 21 and 22.”
“It is certainly true that English law has traditionally taken a restrictive approach to the construction of exemption clauses and clauses limiting liability for breaches of contract and other wrongful acts. However, in recent years it has been increasingly willing to recognise that parties to commercial contracts are entitled to apportion the risk of loss as they see fit and that provisions which limit or exclude liability must be construed in the same way as other terms : see for example Photo Production Ltd v Securicor Ltd….”
“… An exclusion clause is one which excludes or modifies an obligation, whether primary, general secondary or anticipatory secondary, that would otherwise arise under the contract by implication of law. Parties are free to agree to whatever exclusion or modification of all types of obligations as they please within the limits that the agreement must retain the legal characteristics of a contract; and must not offend against the equitable rule against penalties; that is to say, it must not impose upon the breaker of a primary obligation a general secondary obligation to pay to the other party a sum of money that is manifestly intended to be in excess of the amount which would fully compensate the other party for the loss sustained by him in consequence of the breach of the primary obligation. Since the presumption is that the parties by entering into the contract intended to accept the implied obligations exclusion clauses are to be construed strictly and the degree of strictness appropriate to be applied to their construction may properly depend upon the extent to which they involve departure from the implied obligations. Since the obligations implied by law in a commercial contract are those which, by judicial consensus over the years or by Parliament in passing a statute, have been regarded as obligations which a reasonable businessman would realise that he was accepting when he entered into a contract of a particular kind, the court’s view of the reasonableness of any departure from the implied obligations which would be involved in construing the express words of an exclusion clause in one sense that they are capable of bearing rather than another, is a relevant consideration in deciding what meaning the words were intended by the parties to bear. But this does not entitle the court to reject the exclusion clause, however unreasonable the court itself may think it is, if the words are clear and fairly susceptible of one meaning only. My Lords, the reports are full of cases in which what would appear to be very strained constructions have been placed upon exclusion clauses, mainly in what today would be called consumer contracts and contracts of adhesion. As Lord Wilberforce has pointed out, any need for this kind of judicial distortion of the English language has been banished by Parliament’s having made these kinds of contracts subject to theUnfair Contract Terms Act 1977 . In commercial contracts negotiated between businessmen capable of looking after their own interests and of deciding how risks inherent in the performance of various kinds of contract can be most economically borne (generally by insurance), it is, in my view, wrong to place a strained construction upon words in an exclusion clause which are clear and fairly susceptible of one meaning only even after due allowance has been made for the presumption in favour of the implied primary and secondary obligations.”
“It is, of course, open to parties to a contract for sale of goods or for work and labour or for both to exclude by express agreement a remedy for its breach which would otherwise arise by operation of law or such remedy may be excluded by usage binding upon the parties…. But in construing such a contract one starts with the presumption that neither party intends to abandon any remedies for its breach arising by operation of law, and clear express words must be used in order to rebut this presumption.”
“One may safely say that the parties cannot, in a contract, have contemplated that the clause should have so wide an ambit as in effect to deprive one party’s stipulations of all contractual force: to do so would be to reduce the contract to a mere declaration of intent. To this extent it may be correct to say that there is a rule of law against the application of an exceptions clause to a particular type of breach.”
“In my view therefore the Agreement is, if the judge’s construction of Clause 18.6 is adopted, effectively devoid of contractual content since there is no sanction for non-performance by the Respondent. It is inherently unlikely that the parties intended the clause to have this effect. The parties thought that they were concluding a mutually enforceable agreement… .”
“In construing an exception clause against the party which relies upon it …the court will strain against a construction which renders that party’s obligation under the contract no more than a statement of intent and will not reach that conclusion unless no other conclusion is possible. Where another construction is available which does not have the effect of rendering the party’s obligation no more than a statement of intent, the court should lean towards that alternative construction.”
“Neither Party shall be liable to the other under this Sub-Contract for loss of profits, revenue other than as payable pursuant to clause 6.2 [and Schedule 23]. …”
“The law of contract draws a clear distinction between a claim for payment of a debt and a claim for damages for breach of contract. The distinction and its consequences are set out in Chitty on Contracts, 27th ed. (1994), vol. 1, p. 1046, paragraph 21-031. As there stated, a debt is a definite sum of money fixed by the agreement of the parties as payable by one party to the other in return for the performance of a specified obligation by the other party or on the occurrence of some specified event or condition; whereas damages may be claimed from a party who has broken his primary contractual obligation in some way other than by failure to pay such a debt. The plaintiff who claims payment of a debt need not prove anything beyond the occurrence of the event or condition on the occurrence of which the debt became due. He need prove no loss; the rules as to remoteness of damage and mitigation of loss are irrelevant; …”
“…2.3 the workshare will be actively managed to achieve the intended allocations. If deviations cannot be resolved, the parties agree that there will be an escalation procedure to the IBM Lead Executive and the [FSL] Account Director. In case no resolution can be achieved the Dispute Resolution process defined in Schedule 20 shall be followed… 2.5 Management of Workshare The parties shall agree a Management Group to direct and manage the workshare within the PACT Sub-contract and the governance of projects undertaken. The Management Group will be agreed between the Parties and will have defined operational and reporting responsibilities…”
“A party who seeks to obtain a benefit under a continuing contract on account of his breach is just as much taking advantage of his own wrong as is a party who relies on his own breach to avoid a contract and thereby escape his obligations.”
“In my judgment the best solution is to construe the clause as though it read “for loss of production, loss of profits, loss of business or indirect losses or consequential damages of any other kind” and accept that the parties may have been in error to permit the inference that the former phrases are examples of indirect or consequential loss. At least in that way, each of the phrases is given its authoritative meaning, which is what the parties must be supposed to have given their closest attention to. If, however, only production, profit, or business which is within the second limb of Hadley v. Baxendale is intended to be referred to, then everything in the clause other than “indirect losses or consequential damages” becomes redundant and the previous phrases become dangerously misleading and potentially valueless.”
“c) loss of profits shall be recoverable only as specified in Schedule 13 (Finance) or as a basis which may be used for calculating damages payable for infringement of Intellectual Property Rights or breach of confidentiality claims;…”
“20.4 Subject to Clauses 20.6 and 20.8, PwC’s liability to Fujitsu arising under any indemnity or otherwise under or in relation to this Sub-Contract, whether in contract, tort, by statute or otherwise and whether or not arising from any negligence on the part of PwC or any of their agents or employees shall be subject to the following limits: … … c) subject to Clauses 20 4(d) and 20.8, in respect of any Claims or losses arising PwC’s aggregate liability to Fujitsu arising under this Sub-Contract in each Contract Year shall be limited to£5 million for all events or failures giving rise to such Claims or losses; d) notwithstanding the cap set out in Clause 20.4(c), PwC’s overall aggregate liability for all Claims or losses arising under this Sub-Contract shall be limited, subject to Clause 20.8, to£10 million for all events or failures giving rise to such Claims or losses.” … … c) subject to Clauses 20 4(d) and 20.8, in respect of any Claims or losses arising PwC’s aggregate liability to Fujitsu arising under this Sub-Contract in each Contract Year shall be limited to£5 million for all events or failures giving rise to such Claims or losses; d) notwithstanding the cap set out in Clause 20.4(c), PwC’s overall aggregate liability for all Claims or losses arising under this Sub-Contract shall be limited, subject to Clause 20.8, to£10 million for all events or failures giving rise to such Claims or losses.”
“Fiduciary Duties 29. The partnering principles, and/or IBM’s duty of good faith set out above, and/or the circumstances in which IBM was performing its duties (including, in particular, those referred to at paragraphs 3 and 4 above) and/or the workshare provisions (referred to at paragraphs 31 to 40 below), gave rise to a situation in which IBM was (or ought to have been) acting for itself and for Fujitsu in procuring work under the PACT Agreement and in allocating such work between the parties. 30. In the circumstances, IBM owed to Fujitsu fiduciary duties (or business duties akin to fiduciary duties). In particular, IBM owed to Fujitsu the following fiduciary duties (or business duties akin to fiduciary duties): 30.1 A duty to act faithfully and honestly in the procuring of work under the PACT Agreement and subsequent allocation of such work to Fujitsu under the Sub-Contract; 30.2 A duty to act in all respects under the Sub-Contract in accordance with the respect and trust placed in IBM by Fujitsu; 30.3 A duty to be open, honest, clear and reliable in the provision of information to Fujitsu relating to the services which Fujitsu was entitled to carry out pursuant to the Sub-Contract; and 30.4 A duty to account to Fujitsu in respect of the services requested or performed under the PACT Agreement which Fujitsu was entitled to carry out pursuant to the Sub-Contract.”
“The expression “fiduciary duty” is properly confined to those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties. Unless the expression is so limited it is lacking in practical utility…. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary. As Dr Finn pointed out in his classic work Fiduciary Obligations (1977), p. 2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary.”
“That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.”
“If the parties’ relationship has been premised, as I have found, on the possibility of competition within such areas, then I do not see how, in those respects at any rate, the parties can owe to one another the full range of fiduciary duties. It seems to me that Mr Vos was right to place reliance on modern authorities which have stressed that duties, even of agents and such like who are natural candidates for the status of fiduciaries, have to be tailored to the facts and circumstances of the case and do not come wholesale under the label of “fiduciary relationship”.”
“… within the scope of the joint venture and outside the scope of Global’s existing business, I would agree…that Global did owe the duties of a fiduciary or at any rate business duties akin to fiduciary duties and premised on an obligation of non-competition. In this area, Bonyad were trusting Global, and Global were likewise trusting Bonyad, to avoid competition, to act fairly, and be loyal to one another… Within the area of Global’s existing business it is much harder to say what, if any, implied obligations existed…the only obligation that can be implied is the standard contractual obligation which is used when it is necessary to fill a lacuna that the parties act reasonably.”
“But what kind of fiduciary duties did the company owe to the customer? None have been suggested beyond those which the company assumed under the contracts of sale read with the collateral promises; namely to deliver the goods and meanwhile to keep a separate stock of bullion (or, more accurately, separate stocks of each variety of bullion) to which the customers could look as a safeguard for performance when delivery was called for. No doubt the fact that one person is placed in a particular position vis-à-vis another through the medium of a contract does not necessarily mean that he does not also owe fiduciary duties to that other by virtue of being in that position. But the essence of a fiduciary relationship is that it creates obligations of a different character from those deriving from the contract itself. Their Lordships have not heard in argument any submission which went beyond suggesting that by virtue of being a fiduciary the company was obliged honestly and conscientiously to do what it had by contract promised to do. Many commercial relationships involve just such a reliance by one party on the other, and to introduce the whole new dimension into such relationships which would flow from giving them a fiduciary character would (as it seems to their Lordships) have adverse consequences far exceeding those foreseen by Atkin L.J. in In Re Wait[1927] 1 Ch. 606 . It is possible without misuse of language to say that the customers put faith in the company, and that their trust has not been repaid. But the vocabulary is misleading; high expectations do not necessarily lead to equitable remedies.”
“…the court should be very slow to introduce uncertainty into commercial transactions by over-ready use of equitable concepts such as fiduciary obligations and equitable estoppel.”
“Fiduciary obligations may arise in a wide range of business relationships, where a substantial degree of control over the property or affairs of one person is given to another person. Very often, of course, a contract may lie at the heart of such a business relationship, and then a question arises about the way in which fiduciary obligations may be imposed alongside the obligations spelled out in the contract. In making their contract, the parties will have bargained for a distribution of risk and for the main standards of conduct to be applied between them. In commercial contexts, care has to be taken in identifying any fiduciary obligations which may arise that the court does not distort the bargain made by the parties: see the observation by Lord Neuberger of Abbotsbury writing extra-judicially in “The Stuffing of Minerva's Owl? Taxonomy and Taxidermy in Equity” [2009] CLJ 537, 543 and Vercoe v Rutland Fund Management Ltd[2010] EWHC 424 (Ch) , [351]-[352]. The touchstone is to ask what obligations of a fiduciary character may reasonably be expected to apply in the particular context, where the contract between the parties will usually provide the major part of the contextual framework in which that question arises….” and at paragraph 225: “It may also be the case that the overall contextual framework created by the contract simply means that it is not appropriate for the law to impose the whole range of possible fiduciary duties or fiduciary duties of particular types in that specific context — in other words, it may be found that the parties could not reasonably expect that some particular duty of a fiduciary character should apply in the context of their particular relationship or in the context of their relationship with a person accepting appointment as a manager or board member.”
“There are certain settled categories of fiduciary relationship. These include trustee and beneficiary, agent and principal, solicitor and client, promoter and company, partners, director and company… The categories of fiduciary relationship are not closed. There may be such a relationship where all the circumstances justify a finding that fiduciary obligations are owed. … It is possible for fiduciary obligations to arise in a commercial relationship. An obvious example is a commercial agency. Fiduciary relationships do not commonly arise in a commercial setting outside the settled categories of fiduciary relationship. This is because it is normally inappropriate to expect a commercial party to subordinate its own interests to those of another commercial party.”
“In relationships falling short of partnership, but having in them elements of joint enterprise or joint venture, there is no hard and fast rule as to the existence or otherwise either of a duty of good faith, a fiduciary duty or a duty of disclosure. Each case will turn on its own facts, but if the relationship is regulated by a contract, then the terms of that contract will be of primary importance, and wider duties will not lightly be implied, in particular in commercial contracts negotiated at arms’ length between parties with comparable bargaining power, and all the more so where the contract in question sets out in detail the extent, for example, of a party’s disclosure obligations.”
“(1)That in the case of an agent employed under a contract, the scope of any fiduciary duties of the agent will be determined by the terms of the underlying contract : see Henderson v Merrett at 206C; (2) Not every breach of duty by a fiduciary is a breach of fiduciary duty : see Bristol and West Building Society v Mothew at 16D; (3) A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal : see Bristol and West Building Society v Mothew at 18B; (4) The facts and circumstances must be carefully examined to see whether in fact a purported agent and even a confidential agent is in a fiduciary relationship to his principal: see Boardman v Phipps at 127B; (5) The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction: see Hospital Products v United States Surgical Corp at 97; (6) A person may be in a fiduciary position in respect of some part of their activities and not in respect of other parts; each transaction or group of transactions must be looked at: see New Zealand Netherlands Society v Kuys at 1130 D; (7) The essence of a fiduciary relationship is that it creates obligations of a different character from those deriving from the contract itself. Many commercial relationships involve an obligation by a party to do honestly and conscientiously what that party had by the contract promised to do. To introduce into such relationships the whole new dimension which flows from giving them a fiduciary character would have adverse consequences. Merely because a party puts faith in another party and contends that their trust has not been repaid does not give rise to a fiduciary duty; high expectations do not necessarily lead to equitable remedies: see in re Goldcorp Exchange at 98F.”
“Duty of Good Faith 24. In addition, IBM owed to Fujitsu a duty of good faith in the performance of its duties under the Sub-Contract. In that regard, Fujitsu will rely on the content of the partnering principles set out above and on the following express terms of the Sub-Contract (as amended in 2008 and on similar or equivalent wording prior to those amendments): IBM warrants and represents that … (f) it will discharge any obligations it has regarding the Services (to the extent applicable) and that IBM will supply and render appropriately experienced, qualified and trained personnel to discharge any obligations IBM has to the Services under this Sub-Contract, and that such personnel will discharge such obligations with all due skill, care and diligence in accordance with Good Industry Practice and any applicable Quality management Systems” (clause 19.4(f)) ‘Good Industry Practice’ means ‘at any time, the exercise of that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected at such time from a skilled and experienced (a) provider of information, communication and technology services and information systems and/or (b) provider of expertise in change management and business processes; seeking in good faith to comply with its contractual obligations and complying with relevant Legislation and being engaged in the same type of industry and under the same in [sic] similar circumstances and conditions as that in which the relevant matter arises.’ (Schedule 1)”
“19.4 PwC warrants and represents that : … (f) it will discharge any obligations it has regarding the Services (to the extent applicable) and that IBM will supply and render appropriately experienced, qualified and trained personnel to discharge any obligations IBM has to the Services under this Sub-Contract, and that such personnel will discharge such obligations with all due skill, care and diligence in accordance with Good Industry Practice and any applicable Quality Management Systems.” (f) it will discharge any obligations it has regarding the Services (to the extent applicable) and that IBM will supply and render appropriately experienced, qualified and trained personnel to discharge any obligations IBM has to the Services under this Sub-Contract, and that such personnel will discharge such obligations with all due skill, care and diligence in accordance with Good Industry Practice and any applicable Quality Management Systems.”
“In all matters relating to this Agreement the parties will act with the utmost good faith towards one another and will act reasonably and prudently at all times.”