Snelling v Snelling [1973] QB 87

Plaintiff and Defendants were directors of a company and were all owed a lot of money by the company. They signed a contract saying that if one of the directors resigned, they would forfeit the money owed to them by the company.

Plaintiff then sued for the money owed to him by the company.

Court sad that although normally an agreement not to sue a 3rd party was unenforceable, it could be enforced (i.e declaration was given that Plaintiff had forfeited money owed to him) where the promisee had a sufficient interest in TP not being sued.

In this case the other directors were also owed money and therefore they had a sufficient interest to enforce the agreement.

Van der lahn’s correct interpretation is that a stay on an agreement not to sue is unenforceable unless it is precise. However the company itself could not itself stay the action since it cannot enforce someone else’s agreement.