Posted on 5th February 2015

Settling a claim can often be a more fraught and difficult process than fighting it to trial, warns a leading Midlands barrister this week.

Because as both parties agree the bigger picture, says Philip Mantle of No5 Chambers, crucial finer points of the deal may be overlooked.

“Never was the phrase ‘the devil is in the detail’ more true than when two parties enter a binding settlement,” said Philip.

“Settlement can often be just as – if not more – acrimonious than taking a case all the way to court. Because when it is agreed in principle, if one side doesn’t want to be bound until the finer points are agreed they need to make that absolutely clear, or else risk the pitfall of inadvertently entering into a binding settlement before negotiations are concluded.”

An example of this arose in the case of Bieber & Ors v Teathers Limited (In Liquidation) [2014] EWHC 4205 when during the exchange of emails, an accidental settlement was reached.

During a response to a flurry of emails, the phrase ‘Noted, with thanks’ by the defendant, was ruled by HHJ Pelling QC sitting as judge in the Chancery Division, to be acceptance that no further terms needed to be considered.

Philip said: “The Courts ruled that the parties settled their litigation by way of an agreement during the exchange of emails between solicitors that did not stipulate that it was ‘subject to contract’.

“Therefore, once objectively considered, it was ruled that the parties concerned had reached agreement in the same terms on the same subject matter, and that a contract had been formed.”

Philip concludes that Bieber offers a timely reminder to lawyers that it is vital both parties make their intentions clear. Failure to do so could result in clients being bound to terms which may not be in their best interests.

“Although it is not necessary to include the phrase “subject to contract”, the judgments and the absence of the phrase will not prevent the conclusion being drawn that the negotiations were being conducted upon that basis.

“Furthermore, the Court placed considerable reliance upon the fact that the defendants, when acknowledging acceptance of their offer, did not take the opportunity to remind their opponents that the detail of the settlement remained to be agreed and that no binding settlement would arise until those details were agreed upon.

“Clearly if the desire is to negotiate on a ‘subject to contract’ basis, then it is prudent to make this explicitly known and if there is doubt as to whether your opponent is either genuinely unaware or is perhaps being “selective” in their remembrance of how the negotiations are being concluded – it never hurts to reiterate the point for clarity’s sake.”

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