CONTACT US 0845 345 5004

Settlement Agreements: The Devil is in the Detail

Posted on Mar 07, 2014 by Liana Park  | Tags: dispute resolution, mediation, settlement agreement,  | 0 Comments

Liana Park, Solicitor, Dispute Resolution

INTRODUCTION

In the last few months there has been an increase in the number of offers of redress flooding in from banks to victims of the IRHP mis-selling scandal.

It seemed an opportune time to consider the implications of accepting an out of court settlement.The majority of civil court cases are settled out of court. However, the mechanics and implications of an out of court settlement are often overlooked. It is prudent to give some thought to the implications of accepting an out of court settlement.

TIMING

Settlement can occur at any time from when the parties first make contact up to when parties meet at the doors of court before the final evidential hearing. Often cases are settled even before formal court proceedings are raised following pre-litigation correspondence between parties’ solicitors. There are often tactical or economic considerations which influence when a party will decide to make a settlement offer or accept one.

SATISFACTION GUARANTEED?

Out of court settlements are often made without any admission of responsibility and there will usually be no apology from the party offering to pay money. It should be remembered that even if a resounding victory is achieved in court, it is extremely unlikely to prompt any apology from the other side. If it is an apology that is being sought then mediation is the dispute resolution option which may come up trumps. Mediation is discussed in my other blog post.

RECORDING THE AGREEMENT

It is very important that parties, or their solicitors, accurately record the terms of the settlement agreement. This is fairly straightforward if the offer has been made to the other side at an early stage and is set out in email correspondence between the solicitors, or a settlement agreement. However, accurately recording the settlement terms can be more difficult if the agreement takes place during a hurried discussion at the doors of the court. In these circumstances detailed notes should be taken and even then the solicitors involved may end up in the witness box if there is a dispute as to the settlement terms. If possible, parties should try to settle in good time so that negotiations can take place. The recent case of Newbury v Sun Microsystems illustrates the dangers of a hasty late settlement.

The negotiations leading to a potential settlement are best carried out on a ‘without prejudice’ basis. This means that if agreement is not reached and the case continues in court, parties cannot rely on those discussions because they were made in the course of settlement negotiations.

A GOOD DEAL?

If a Google search were to be undertaken for quotes on settling then the word ‘settle’ is usually preceded by the word ‘Don’t’. However in the uncertain world of litigation, it is generally accepted that settling is a good thing. With an out of court settlement both parties have certainty as to what they will be getting or giving. The parties' solicitors will have negotiated the agreement and it follows that it will ultimately be an arrangement that both parties can live with. In litigation there are no guarantees so an out of court settlement is one way to minimise stress and risk.

There are often economic factors at play when a party decides to settle (e.g. it would cost more to defend the action to the end, perhaps unsuccessfully, than to offer a reasonable sum now and see the matter at an end). There is also the time spent by management liaising with solicitors on the matter, which could be spent more valuably growing the business.

The ultimate deal that is agreed is likely to be something the offering party can afford, funds can be obtained quicker than if the case runs its course in court. If an order is made by the court, it may be that the other side cannot afford the sum ordered and enforcement action may need to be taken to recover the money.

THE END OF THE MATTER

If you accept a settlement offer from the other side this will almost always be 'in full and final settlement of any claim' in relation to the disputed matter. This means that the party accepting the offer cannot seek to pursue a claim in relation to that matter again whether in court or through a public body set up to deal with complaints such as the Financial Ombudsman Service.

CONCLUSION

Through all stages of a dispute parties should keep in mind the possibility of settlement. As dispute resolution solicitors we will advise at all stages on the progress and potential settlement of your case. 

In the context of the FCA Review, the offer letters issued by the bank are a form of out of court settlement. So it is worth remembering that the offer letters, if accepted, are the final word on that mis-sale. The offers are made without admission of liability, which means that the bank are not admitting they are wrong or making an apology.

CONTACT US

Please note that this article is a non-exhaustive description of some of the factors to be considered when settling a case out of court and is provided free of charge. We can advise you on settlement at all stages of a dispute.

If you would like advice on a dispute please do not hesitate to contact our Dispute Resolution team on 0131 226 8200

While every effort has been made to ensure the accuracy of this blog post, it is not intended to provide legal advice as individual situations will differ. No recipients of content in this blog post should act or refrain from acting on the basis of the blog post without seeking the appropriate legal advice on the particular facts and circumstances at issue from a qualified solicitor in their jurisdiction. The blog post is for general information only and is not legal advice. The law changes frequently and varies from jurisdiction and jurisdiction. No solicitor-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with a solicitor qualified to practise in your jurisdiction.  Should you be interested in seeking our assistance with a legal matter, please contact the Dispute Resolution team on 0131 226 8200.

Becoming A Leader Others Want To Follow
Herald Scotland News Article: MPs Challenge Govern...

Contact us

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input

You must confirm you have read and accept our Website Privacy Policy.

Invalid Input

Contact us

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
You must confirm you have read and accept our Website Privacy Policy.
Invalid Input