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By | John Oates 18th May 2005 09:59

Sears sacks CSC

Pulls plug on $1.6bn contract

US retailer Sears Roebuck has pulled out of ten-year IT services agreement with CSC claiming the company is in breach of its contract.

In a filing with the SEC, Sears said it was ending its contract with CSC “due to CSC's failure to perform certain of its obligations”. The contract was signed in June 2004 and gave CSC responsibility for desktops, servers and supporting company websites.

But CSC responded with its own filing which accused Sears of ending the agreement without just cause. It said the termination was due to Sears recent merger with K-Mart and: “the termination for “cause” is invalid, contrived to avoid or reduce termination fees of tens of millions of dollars”.

CSC told the SEC it had already made substantial investment in the contract and would continue to seek recompense but if it was unsuccessful there would be an impact on its earnings.

The two companies are now likely to face each other in court. CSC has already failed in an attempt to get an injunction to prevent Sears ending the contract. Sears said it will continue to defend itself against any claim for compensation.

More details on Cnet here. ®

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