Planning your exit

The Technology and Construction Court has reviewed the meaning of certain termination and exit terms in a complex outsourcing agreement. The case concerned IT services. The client terminated the agreement. That triggered various exit provisions including a plan to bring the services back in-house or transferring to another provider. The judge decided that the “shared infrastructure” by which the exit services were to be provided included equipment, systems and facilities at shared data centres in various countries. He concluded that the supplier’s exit obligations did arise. This was even though provision for a fixed fee for them in the contract had been left blank and the client had not provided a plan of what it required to transfer the services. This case underlines how important it is to agree the principles of an exit management plan before the contract is signed. A supplier should be obliged to provide a detailed plan, updated regularly, specifying which assets and services are provided exclusively and which are shared with other customers. The plan should also address the input and assistance required on termination, a clear back-stop date and whether the exit services are part of the overall charges or determined separately and on what basis.

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