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Settlement Agreements Notes

BPTC Law Notes > Alternative Dispute Resolution Notes

Updates Available  

A more recent version of these Settlement Agreements notes – written by City Law School students – is available here.

The following is a more accessble plain text extract of the PDF sample above, taken from our Alternative Dispute Resolution Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

ADR: SETTLEMENT AGREEMENTS REACHING A SETTLEMENT Agreement

* Agreement reached in negotiation/mediation will usually constitute an oral agreement - in theory enforceable from time agreed.

* Enforceability may be made subject to client consent or agreement reduced into writing and signed - state expressly at time of agreement and give time-limit for fulfilment (mediator will provide) Terms

* Absence of term regarding costs - each party taken to be responsible for own costs

* Provision for disputes arising out of contract should be included

* Methods of enforcement in the event of breach should be considered/included

* Obligations can be made dependant on other party's fulfilment of their obligation(s)

* If litigation commenced, agreed means of bringing to an end. Contractual Principles

* Settlement Agreement essentially a contract - governed by contractual principles

* Party may be able to issue proceedings to set aside/defend proceedings brought to enforce the agreement if contract vitiated (fraud, duress, misrepresentation)

* If one party lacks legal capacity (under-18, mentally unfit), requires court approval to be enforceable RECORDING THE SETTLEMENT

Adjudicative Process (eg. - Written decision such as agreed arbitration award Arbitration) - Should cover all relevant matters such as interest and costs Expert Determination Written Decision Non-Adjudicative Process Usually result in oral agreement - Compromise agreement (eg. mediation or negotiation) - enforceable by contractual principles Non-Adjudicative Evaluation Written report from third party - will inform further (eg. neutral expert determination) discussion between the parties Grievance Resolution Scheme May be no formal "settlement", so long as issues addressed Non-Adjudicative Settlement - Options: Oral Contract - often reached when parties settle in non-adjudicative process

* If no proceedings, enforce via new proceedings for breach of contract. Written Contract - to be signed by parties (or deed where no/no sufficient consideration or contract requires formality)

* Certain types of agreement - require signed writing (consumer credit agreements, legal assignments, guarantees, contracts for sale/disposition of land)

* Should state only binding on parties signing (Investec Bank)

* If agreement altered (varied/replaced) an earlier contract, this should be amended and the variation/replacement should be included in settlement agreement Exchange of letters - one solicitor writes out terms in letter, other accepts by letter

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Can form contract itself if no face-to-face negotiations/agreement, otherwise evidences agreement. Chain of letters will not necessarily amount to settlement (Jackson)

Endorsement on briefs - simple agreement, terms recorded on backsheet of barristers' briefs and signed ("endorsed") by both barristers (signifies agreement) and, where reluctance, parties.

* Primary purpose of endorsing brief to confirm that work has been done

* Ensure same wording used on both barristers' briefs.

* Green v Rozen - Endorsement "by consent all proceedings stayed on terms endorsed on briefs with liberty to apply" - held, did not reserve right to return to court, new proceedings required to enforce agreement. COURT ORDERS Requirements:

* Restrictions in CPR, Part 2 -

* Court must have jurisdiction - ie. proceedings issued (and agreement only covers issues in claim (statements of case))
* If issue agreed which is not in statements, judge may allow amendment (unlikely if major)

* Agreement for common-law remedy agreed (money, goods),

* Provision for disposal of proceedings - stay/dismissal/entering judgment of case Formalities:
* Express as being "by consent"
* Usually use wording of agreement
* Should state how to dispose of proceedings
* Costs provision - otherwise each party bears their own
* Signed by legal reps of both parties
* Filed with listing officer

* Costs can be made as consent orders without involving a judge (r40.6) Types of Order Interim Order - If agreement over terms of interim order, record (as undertakings) in draft order, then take to judge for approval Consent Order - Only if proceedings issued (or EU mediation - CPR r78.24) and terms agreed could be ordered by court - take to judge to order Steve Gorman

* "True consent order" - based on contract between parties - order is evidence of contract, therefore can only be set aside on contractual grounds

* If parties merely "not objecting" - no real contract, order is basis of settlement - can be varied/discharged on bases for varying/discharging court orders
* Court cannot vary/discharge on contractual grounds (duress, misrep, mistake) - party must bring fresh proceedings
* All Family consent orders - legal effect derives from order not underlying contract Tomlin Order - Court-orderable terms on front, rest in schedule

* Provide for proceedings to be stayed except for purposes of carrying out terms of compromise

* "Liberty to apply" for court to enforce terms of order

* Face of order must include:
* Proceedings to be stayed (except for purposes of carrying out compromise)
* Each party has liberty to apply to enforce compliance with terms

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* Payment of costs (PD40B, para 4.5) - separate type of order therefore must be included in public part of order
* If amount of costs agreed - sum can be in schedule. Enforcement of terms in schedule more limited - if wish to enforce, must apply to have matter brought before court and for term to be moved to face of order (then failure to comply will be contempt) Terms on face - governed by rules for varying court orders - require material change of circumstances to vary Terms in schedule - governed by contractual principles - vitiate on contractual grounds.

Administrative Consent Order

* Limited circumstances where consent order can be entered via purely administrative process (sealed by court officer without need for judge approval)

* Available for:
* Payment of money (inc. costs)
* Delivery up of goods
* Dismissal of all/part of proceedings
* Some other cases

* Draft order + letters expressing consent of parties sent to court

* If any doubts/concerns, draft order may be referred to a judge for consideration - discretion not to accept terms drafted (esp. if thought inappropriate or poorly drafted) Re-litigating Dispute after Order

* Attempt to relitigate underlying dispute after consent order - likely to be met by application to strike out
* Basis: Cause of action estoppel or abuse of process

* "Abuse of process" - depends on range of factors, esp. extent of overlap between prior and new proceedings

* "Cause of action estoppel" - Not where tomlin order as not final judgment (Zurich Insurance)
- Controversial area TERMS OF THE SETTLEMENT Main Terms to Consider:

* Whether any term is a pre-condition to performance of another term

* Dates and methods of payment - consequences of not paying on time

* Interest payable

* Costs, including ADR process and drawing up compromise
* Court powers to award costs only apply where proceedings have been issued (ie. for court orders)

* Whether compliance with terms must be absolute or "best endeavours"

* Whether, and if so in what circumstances, parties revert to original rights (ie. original dispute)

* Mechanics for entering into future agreements (eg. agreeing prices)

* Mechanics for giving effect to agreement (eg. conveyance of land)

* Effect of agreement on non-parties
* Contract should not seek to effect third-party unless they have agreed to be bound.

* Indemnities/contributions if compliance/defective compliance results in liabilities to nonparties

* Confidentiality of terms of settlement

* Law applicable to agreement

* ADR process if dispute over compromise

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