Minor warranty breaches can add up to a material breach, says UK court

I’ve sometimes written into contracts that multiple non-material breaches of a contract, even if cured, can add up to a material breach. A UK court held that this was the case in a lawsuit by British Gas against global consulting-firm Accenture (formerly Andersen Consulting) over alleged defects in a customer-billing system. See this article by Stuart McGinn of the respected London law firm Bird & Bird.

Evidently the contract defined Fundamental Defect using and/or language that allowed for aggregating multiple breaches in this way:

a fundamental breach of Clauses 15.2.1 and/or 15.2.2 and/or 15.1.1(i) [the warranties] … which causes a severe adverse effect on the British Gas Business; [Emphasis added.]

In hindsight, it would have been better for Accenture to use just “or” instead of and/or.

Also of interest was the court’s holding that money paid by British Gas’s parent company to its own customers to resolve billing problems were not ‘consequential damages’ – see these comments on that subject.

For more information on this case, see:

• British Gas sues Accenture over billing ‘shambles’ – The Sunday Times, May 11, 2008
• Aggregating Fundamentals – Society for Computers and Law, Nov. 13, 2009
• GB Gas Holdings v Accenture – Jones Day, Jan. 2010