Recording Settlement Flashcards
What must the lawyer ensure when reaching agreement?
- The terms are comprehensive
- Each term is clear and detailed
- The client understands the agreement
- The client accepts the agreement
- The terms are appropriately recorded
- The terms are appropriately enforceable
What are the lawyer’s professional obligations?
- To protect the client’s interests when advising on a settlement, without regard to the lawyer’s own interests or consequences
- Report to the Legal Aid Agency when a client refuses to accept an offer to use ADR/to settle
- Where one of the parties lacks capacity, to appoint a litigation friend under Part 21
- Mental capacity for this is the capacity to conduct the claim
What are the forms of recorded outcome?
- Written decision – adjudicative & ED
- Written report from a third party - non-adjudicative. Will not provide a final outcome, but will inform further discussion
- A letter
- Oral agreement (e.g. mediation/negotiation)
- The outcome is not set (e.g. conciliation)
Usually provided for in ADR agreement.
What is a compromise agreement?
- A contract compromising the dispute
- Agreeing not to litigate is good consideration
- Better to state expressly that the right to litigate is being given up (but it can be inferred by the court if the circumstances are clear)
- Has the same effect as a contract
Full and final settlement
- If the whole dispute is settled, the compromise agreement is stated to be ‘full & final’
- Be careful - these words will make it difficult to rectify
- There are two problems in using this phrase:
- the settlement may affect related claims by other persons
- they may result in other disputes between the parties also being settled
- If the words are used, whether related claims are barred on the basis that they are included depends on the proper construction of the compromise agreement
- A party who wishes to preserve their right to sue on other causes of action should expressly reserve that right
Subject to contract
There is no concluded agreement until a written contract is signed
These exact words must be
HOW SHOULD RECORDS BE MADE DURING THE ADR PROCESS
- Vital to keep a clear, detailed and accurate record of what is agreed or provisionally agreed
- At the end of mediation/negotiation, write final terms on a fresh sheet of paper.
- A copy may be made and handed over straight away
WHO SHOULD PRODUCE A FORMAL RECORD?
- This should be agreed
- The lawyers for one side can produce a draft and send it to the other side
- It should also be agreed when the draft should be sent to the other parties and who should pay the costs
- Note: the wording of a draft order is subject to the discretion of the judge
What is the main difference between the different methods of recording?
- Where a court is involved, the terms can normally be enforced by returning to court within the existing proceedings
- Otherwise, it may be necessary to issue new proceedings for breach of contract
(Some settlements may take a few forms)
How should a written settlement be drafted?
- Terms must be comprehensive and accurate
- All the essential terms should be agreed, or machinery provided for establishing them (failure to do this may render the settlement unenforceable for lack of certainty)
- All practical details should be included
- Interest and costs should be dealt with
- Some expressions make it difficult to avoid further proceedings and should be used with care (e.g. a term that one party would pay ‘damage for trespass’ to be determined by a surveyor, inevitably requiring proceedings to interpret the phrase)
- Some enforcement options can be built in (e.g. interest for late payment) or one term can be made pre-condition to another
- Ensure the terms are enforceable
- Avoid vagueness or ambiguity
- Bear in mind any foreseeable future events that may affect the terms
An oral contract
- Once the basic oral contract requirements exist, there is an enforceable contract
- Once made, may be difficult to vary or challenge it
- Any condition must be stated
Exchange of letters
- Common with non-adjudicative
- One solicitor to set out the terms in a letter, the other side replies to agree
- Cost effective
- Can form a contract without face-to-face ADR
- NB: A chain of letters on a single issue does not necessarily amount to a settlement
- If there has been a face-to-face process, the letters evidence the oral agreement
Contract/Deed
- Is a contract appropriate?
- Common with non-adjudicative
- May be appropriate where the terms are complex
- Or where parties want a formal separate legal document for later reference
- May be appropriate with an ongoing relationship
- If there is already a contract, it will be need to be clearly varied/replaced
- Some of the terms may go into the contract, and others in letters
- A deed may be more appropriate than a contract in limited circumstances
How is a contract agreement drafted?
- One solicitor drafts and sends to the other in the normal style
- This will take longer and is potentially the most expensive method of recording
- Common to include a preamble setting out that the contract is to resolve a dispute and summarising the dispute, to ensure clarity
What settlement recordings are available where there are existing court proceedings?
Will deal with terms of settlement, disposition of the proceedings, and costs
- Written contract
- Endorsement on counsel’s briefs
- Entry of final judgment
- Judgement with a stay of execution pending payment of instalments
- Court order with discontinuance of claim
- Consent order
- Tomlin order