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Procurement and Outsourcing Journal: November/December 2012

David Sawtell examines liability for third parties in contracts for services

A company usually accepts that it owes a duty of care to its own employees, and that it will normally be held responsible for their acts and omissions. In recent months, however, the Court of Appeal has held that an organisation can sometimes owe a duty of care to the employees of another body. In other circumstances, a company might find itself liable for the wrongs of individuals who are engaged by someone else. The courts are increasingly looking beyond the formal or contractual relationships between different bodies. This trend poses particular problems when drafting contracts for the procurement of services. An injured claimant might choose to include not only the service provider in his or her action, but also the company who is buying these services. Sometimes insolvency can disrupt chains of indemnity, leaving even carefully drawn up contracts in tatters.

Peter Jansen reviews the remedies arising from errors in tender assessments

The recent threat of judicial review on the West Coast Main Line has forced the government to rethink tender assessment procedures for rail franchises. Cases following serious errors in evaluation provide insights both into evaluation practice and the range of available remedies.

Jack Hayward

Jack Hayward reports on recent unrest in the procurement arena

Readers may remember my comments in the last edition about the G4S shambles at the Olympics. Hot on the heels of that disaster has come the flawed franchising episode on the West Coast Mainline. While the blame is being pointed at the civil servants involved in evaluating the bids, it is important to remember that the two commercial entities in this sorry saga are not unsophisticated players in this very technical and sensitive market.

Dr Sam De Silva considers the apportionment of compliance costs

Laws often evolve during a long term outsourcing relationship, so the outsourcing contract must specify which party will bear the costs of complying with the modified laws. Customers typically claim that the service provider should bear this risk.

Achilles

Glenn Fletcher offers an overview on the European Commission’s proposals to change the application of the Procurement Directives to services contracts

In December 2011 the Commission published a proposal for a new directive intended to simplify and modernise the law on public procurement. The draft directive is now under discussion by the European Parliament and the Council of Member States and the UK government expects the adoption of a final text in 2013. All states must then make any necessary changes to national law by a further 18 months. The changes will not therefore take effect in UK law until sometime in 2014.

Eversheds

John Bennett contemplates the extent to which the common law can regulate the tendering process

This article outlines the development of UK common law rules relating to the tendering process and the extent to which those rules regulate tendering in the absence of detailed rules under the procurement regulations (The Public Contract Regulations 2006). It considers three recent cases where it was decided that there was an implied contract that regulated the tendering exercise in those circumstances. It concludes that where there is detailed tendering documentation then the law is likely to imply that some contractual obligations do govern the exercise, but that the precise scope of those obligations will be the subject of an exercise in contract construction – itself no easy task (per Lord Hoffmann in Attorney General of Belize v Belize Telecom Ltd [2009]).

Al Goodwin discusses the impact of the Community Right to Challenge under the Localism Act 2011

Wednesday, 27 June 2012: Wimbledon is in full swing, with Heather Watson becoming the first British woman to make it through to the third round since 2002, and further afield Spain progresses to the Euro 2012 final, having knocked out Portugal on penalties (something everyone in England can identify with). Also, to much less fanfare and seemingly unnoticed by most, the Community Right to Challenge (CRC) under ss81 to 86 of the Localism Act 2011 came into force (SI 2012/1463, Article 4).

Siobhan Jones and Clare Arthurs assess the lessons to be learned from Scottish Widows v BGC International

There is no such thing as the perfect contract. Ongoing negotiations and changing commercial imperatives mean that the parties’ intentions and understanding of the contract may be a somewhat moveable feast. The Court of Appeal has recently revisited the principles the courts use to construe contracts in the event that the parties are no longer united in their interpretation of the document(s) formalising their commercial relationship. This will be of great relevance and concern for all practitioners and departments dealing with contracts from the point of first contact and negotiation onwards.