Reaching a Settlement

Question 1

REACHING AN ORAL AGREEMENT

Answer 1

• This initially constitutes an oral contract, which is binding
• If it is intended that it will subject to a condition (e.g. client approval) this needs to be agreed in advance

Question 2

WHAT IS THE ROLE OF THE LAWYER WITH REGARDS TO SETTLEMENT?

Answer 2

• Advising in advance what terms may be appropriate
• Advising what terms to offer and whether to accept an offer
• Drafting and/or advising on approving detailed terms, once settlement is reached

Question 3

What should the lawyer check about the provisional agreement?

Answer 3

• All issues are resolved
• Both sides agree exactly what has been agreed
• Details are included
• If there are still actions to be taken to complete the agreement, agree how and when
• All details relating to figures, date of payment, interest or penalty have been included
• Costs
• Details of any CFA, DBA or third-party finance agreement
• Double check all arithmetic
• If an apology is to be provided, agree on the wording and means
• If a term is that the parties will enter into a new contract, the form and terms of the contract
• Each term is practical and realistic
• Methods of enforcement in the event of breach (e.g. penalties)
• Make provision for how disputes arising out of the terms should be dealt with
• If litigation has already been commenced, provide for the means by which the litigation will come to an end (e.g. a consent order, a Tomlin order, dismissal etc.)
• Agreement on crucial issues is within the instructions and is as close to the client’s instructions and objectives as possible
• The client understands the agreement and accepts it

Question 4

What unreasonable tactics may undermine a provisional agreement?

Answer 4

• Renegotiation of an issue (insist that the terms are an oral agreement and can’t be varied)
• Adding an issue last minute
• Filling a gap with something unagreed
• Points of detail (can be used tactically as a mask for renegotiation)
• Confusion
• If a lawyer acts unreasonably in refusing to agree to the terms of an order being drawn up following directions from a judge, he may be liable for costs incurred

Question 5

HOW SHOULD THE OUTCOME BE RECORDED AT THE END OF THE DAY?

Answer 5

• Very risky to leave the terms as an oral contract, even if everyone is tired
  
  • Memories will differ and one party may change his mind
• If lawyers are present, they will draft the settlement
  
  • Laptop is ideal
  • Possible draft settlement terms can be written in advance for ease
  • One or both lawyers usually make a note of terms agreed as the negotiation progresses
  • The wording should be agreed finally in a fresh document
• If no lawyers, heads of agreement may be signed and referred to lawyers for drafting (but the terms will only be binding once this is done and signed by the parties)

Question 6

WHAT IF NO AGREEMENT IS REACHED?

Answer 6

• It may be appropriate to adjourn
• If so, the basis on which the process should be resumed should be agreed
• Note provisional agreements and reasons
• Confirm this by an exchange of letters and emails
• If there has been movement on some issues without agreement, make a note
• a Part 36 offer may be made or updated based on what’s happened
• A mediator will often offer to provide the parties with further support
• Another ADR may still be appropriate

Question 7

How is the settlement agreement bound by contractual principles?

Answer 7

• The agreement must comply with contractual principles to be enforceable
• A party may be able to issue proceedings to set aside a settlement agreement, or defend enforcement proceedings, if the contract is vitiated by fraud or misrepresentation

Question 8

When will further approval be needed for the contract?

Answer 8

• If one of the parties lacks capacity – it will be provisional until court approval
• If one of the parties is a public body/company – it will be provisional until approved by a committee