On 19 April, TSB found out the hard way what many other organisations, the NHS included, already knew - that Murphy's Law definitely does apply to IT projects.

More than four months after a planned upgrade to its IT systems locked hundreds of thousands of customers out of its banking facilities, TSB has assured customers not only that it is back up-and-running but that no customer will be left out of pocket as a result of the botched upgrade.

It is a bold claim, not least given given the Bank of England's decision on 2 August to raise interest rates, which no doubt exacerbated borrowers' woes at being unable to switch from or remortgage with TSB since March.  But it is an important one from a point of view of maintaining trust and confidence in the bank.

So where does TSB's assurance leave its IT provider?  It is likely that the bank's lawyers are poring through the supply contract in search of warranties and indemnities upon which it can rely in seeking to pass on some, if not all, of the costs it will face as a result of the botched upgrade, but the success of any such claim will depend on the detail of the supply agreement.

So we go back to Murphy's Law.  There is often an acceptance in IT projects that delay is inevitable and that something will go awry; the extent of the delay and the issue is more relevant than the fact of it.  The mere fact of a delay will not establish a claim against the IT supplier and the first line of defence is often for a supplier to allege that a project's scope has been altered by the contracting party, thus causing the delay.

Contracting parties must be mindful that what they consider to be minor tweaks might later - in the event of a dispute - be argued by the supplier to be significant changes of scope that caused, or justified, a delay (and additional expense).  The extent to which this is the case with TSB is yet to be established but will no doubt form part of the supplier's defence of any claim that may be in the offing.

Considerate and deliberate drafting of the supply agreement is of fundamental importance and will determine, to a large extent, what certainty exists in the event that things do (and remember, they will) go wrong.  Contracting parties should insist on robust indemnities from their suppliers which, aside from the inevitable hit to goodwill, look to hold the contracting party harmless as much as possible.  Picking a partner is crucial; it pays to be cautious about sales puff and bold claims from suppliers about their capability and first-hand references regarding similar completed projects should be sought and preferred.

We will know the true cost of TSB's botched upgrade in due course but the hit will unquestionably be financial and reputational. Issues with IT upgrades may common but they are not inevitable, and the uncertainty of knowing each party's rights can certainly be avoided with thoughtful contract drafting. 

Ciaran Dearden is an Associate Solicitor in Freeths' Dispute Resolution team. The team have a broad range of experience with particular expertise in working in the manufacturing and technology sector. ciaran.dearden@freeths.co.uk