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HP Suing ECI for $23, 000, 000 and Change


/ By Itzhak Dannon /

The Israeli branch of the  global technology corporate giant Hewlett Packard (Israel) which, among others provides computer and IT services,

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פטיש LAWfiled a claim in the Tel Aviv District Court for the sum of NIS84 million ($23.1 million) against ECI Telecom, an Israeli company that specializes in communications.  HP claims that the defendant refuses to pay that sum certain despite the fact that there is an expressly stipulated agreement by the parties for its payment by ECI, which agreement properly executed and binding, and despite the fact that all terms and conditions required for payment have been fully met.

The lawsuit claims that in 2010 HP and ECI entered a long-term agreement by which HP agreed to provide various computer and IT services to ECI.  Provision of services by HP was followed by the issuance and submission of invoices for payment to ECI, all in accord with the agreement terms.  However, the lawsuit avers, ECI decided to pay HP “selectively” and for many months did not pay for the services it was provided by HP.

The complaint alleges that ECI has in fact approved the payment of HP invoices, totaling millions of dollars — it just did not pay them.  When plaintiff demanded that it should settle its obligations, defendant’s managers represented that the company faced an acute liquidity problems, thus experiencing serious difficulties in meeting its financial obligations.  Things came to the point that HP informed ECI that any further failure to pay the debt would cause the former to terminate the agreement.  HP also asserts in its pleadings that it even had to send defendant a warning that it would seek ECI’s liquidation.

The lawsuit states that in August of last year (2012), the parties reached an agreement to settle payment of a debt of more than seven million dollars, however, because the parties failed to come to an agreement as to a modified scope of services, necessitated by ECI’s financial and business deteriorating state of affairs, the latter continued to breach the then existing agreement, by failing to pay its debts which were accruing monthly, and despite numerous notifications and warnings from HP.  Consequently, the suit alleges, HP canceled the agreement and submitted a demand to ECI, pursuant to the terms of said agreement, to pay it a termination fee of approximately $23 million.

According to HP’s pleading, it canceled the agreement with ECI in concert with its legal rights and rejected ECI’s contention that it was the party who breached the agreement.

Finally, the suit makes the following averments: On 21 March, HP filed a complaint against ECI seeking payment of part of a debt ECI unilaterally offset, and less than 24 hours after filing the claim ECI announced that will immediately pay the full amount of debt it previously offset.  And indeed it did pay it a day later.  According to HP such conduct shows, on one hand, that its claim is just, and on the other, how wrongful is ECI’s attempt to avoid paying its debt.





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