Xchanging, the electronic services provider, has launched legal action against Synergy Insurance Services – a company it helped set up – for alleged multiple breaches of a business agreement.

Xchanging’s Ins-Sure Services claims in a High Court writ that Synergy, the managing general agent and intermediary, failed to pay £117,500 set-up fees.

Synergy could also be liable for further damages for allegedly breaching an exclusivity clause, which stated that Xchanging was to be sole provider of services to Synergy once it had started trading.

According to the writ, under an agreement made on 10 November 2003, Xchanging agreed to offer “development services” to Synergy for £100,000 plus VAT, which Xchanging said was at “a discount to our standard charges”.

This fee was to be paid when Synergy obtained funding and subsequently commenced trading, estimated by both parties to be by 15 December 2003. On that date Synergy was to enter into a “master service agreement” with Xchanging, according to the writ.

However, this did not occur until nearly two years later, at a cost to Xchanging that it says was “significantly in excess” of the £100,000 fee.

Another clause in the agreement stated that the reduced fee was dependent on Synergy not talking to other companies, during the development period, about the provision of electronic services prior to the master services agreement coming into force.

But, according to Xchanging, Synergy sent an email in November 2005 stating its intention to “go with Logica CMG as preferred supplier”. For this reason, Xchanging is seeking further damages on top of the £100,000 fee it claims is due.

Xchanging Ins-Sure Services is jointly owned by Lloyd’s, the International Underwriting Association and Xchanging.

The writ was lodged by DLA Piper UK on behalf of Xchanging on 18 September.

Both parties declined to comment.