CECA Law Review

CECA Law Review 2015

Prescription and Limitation

Gillian Woodward

Prescription

• Prescription and Limitation (Scotland) Act 1973

Section 6 – Extinction of obligations by prescriptive periods of five years

“(1) If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of 5 years –

(a) without any relevant claim having been made in relation to the obligation, and

(b) without the subsistence of the obligation having been relevantly acknowledged,

then as from the expiration of that period the obligations shall be extinguished.

Prescription

• Section 11 – Obligations to make reparation

“(1) Subject to subsections (2) and (3) below; any obligation (whetherarising from any enactment, or from any rule of law or from, or byreason of any breach of, a contract or promise) to make reparation forloss, injury or damage caused by an act, neglect or default shall beregarded for the purposes of section 6 of this Act as having becomeenforceable on the date when the loss, injury or damage occurred."

Prescription

• 2 qualifications:

- Section 11(2):

"Where as a result of a continuing act, neglect or default loss, injury or damage has

occurred before the cessation of the act, neglect or default the loss, injury or

damage shall be deemed for the purposes of subsection (1) above to have occurred

on the date when the act, neglect or default ceased.”

- Section 11(3):

"In relation to a case where on the date referred to in subsection (1) above (or, as

the case may be, that subsection as modified by section (2) above) the creditor was

not aware, and could not with reasonable diligence have been aware, that loss,

injury or damage caused as aforesaid had occurred, the said subsection (1) shall

have effect as if for the reference therein to that date there were substituted a

reference to the date when the creditor first became, or could with reasonable

diligence have become, so aware.”

David T Morrison & Co Ltd v ICL Plastics

• 2004 - explosion at the ICL Plastics factory in Glasgow

• 2007 - the company pleaded guilty to breaches of the Health & Safety at Work Act

• July 2009 - public inquiry reported there has been 'an avoidable tragedy‘

• August 2009 - Morrison raised an action for damages.

• ICL admitted liability but defended on the basis that its obligation had prescribed

David T Morrison & Co Ltd v ICL Plastics

• Does it mean that the creditor only needs to know:

1. that loss, injury or damage has occurred; or

2. that loss, injury or damage has occurred and that loss hasbeen caused by an actionable wrong

• Supreme Court favours interpretation 1

– more consistent with natural reading of the English language

– produces more certainty around the application of the legislation

John G Sibbald & Son Limited v Douglas Johnston andDMJ Associates

• April 2003 pursuer appointed defender to provide various professional services:

“Design and specify: the new bridge over Harburn Water,

repair works to old bridge as agreed with Highways, all roads

(to be adopted and private), servicing provision for

gas/water/electricity/drainage/telecom, pumping station. All to

comply with planning requirements, Road Construction

Consent, Building Control, Insurers, NHBC and all other

interested parties.”

John G Sibbald & Son Limited v Douglas Johnston and DMJ Associates

• The bridge was completed in early 2004

• In May 2005, West Lothian Council refused to adopt it

• March 2013: Pursuer sued alleging various breaches:

– failed to obtain the consent of WLC in respect of the bridge design;

– failed to inform the pursuer that the bridge was being constructed without approval of the design by WLC;

– failed to exercise reasonable skill, care and diligence;

– failed to ensure that the bridge was constructed to adoptable standard.


• Defender

– denied any breach; and

– argued that, in any event, any obligation to pay in respect of the breach had prescribed under s.6 of the Prescription and Limitation (Scotland) Act 1973


• Pursuer:

– argued that the prescriptive period continued to run under s.11(2) of the Act, as defender had continuing duty to review the bridge:

– the relevant breach was the omission to review the design

John G Sibbald & Son Limited v Douglas Johnston and DMJ Associates

• Defender’s arguments:

– there is a difference between a continuing breach and a continuing duty

– question was whether the losses for which Sibbald was claiming were caused by a continuing act, neglect or default

– the duty to review did not cause the loss which was caused by negligent design and failure to obtain approval


• The Court found in favour of the defender.

• The Court should ask:

1. What act/failure caused the loss?

2. Is the act/failure a continuing one?

• The losses were not attributable to duty to review so s.11(2) did not apply


Lessons Learnt:

• Contractors may have a continuing duty to review their design work and it is unclear when such a duty comes to an end.

• Identify the breach which resulted in the loss sustained and it is that breach which will be relevant for the purposes of calculating the commencement and cessation of the prescriptive period.

Louise Forster

Letters of Intent/Contract Interpretation

Letters of Intent

• Why are they used?

• Challenges in using them

• What are LOIs and are they binding?

• Precautions for use

• Twintec Ltd v Volkerfitzpartick Ltd [2014] EQHC 10 (TCC)

Why are Letters of Intent used?

• Programme

– Long lead-in times

– No funding in place

– Tied to completion date

• Impact from Employer’s perspective

• Impact from Contractor’s perspective

Letters of Intent – the challenges

• Challenges:

– Uncertainty as to whether they constitute a contract

– Uncertainty of scope of works

– Uncertainty of payment rights

– Uncertainty of rights and obligations

– Uncertainty of standards

– Uncertainty over consequences if the letter of intent “expires”

What is a Letter of Intent and are they binding?

3 main categories:

• Comfort letters

• Letters giving rise to a quantum meruit entitlement

• Letters giving rise to a contractual relationship

– Unilateral (“if”) contract

– Bilateral (“ordinary”) contract

Comfort Letters

Letters entitling Quantum Meruit

“If” ContractOrdinary Contract

1 - Comfort Letters

• In its simplest form, a Letter of Intent is no more than a comfort letter

• Simply confirmation of a present intention to enter into a future contract:

“We confirm it is our intention to enter into a contract with you…”

• Vague statements of goodwill / a statement of current policy

• No liability in respect of future contract

• Not binding – language is too vague to create legal relations

2 - Letters giving rise to a quantum meruit entitlement

• Most letters of intent go beyond simple comfort letters and request the recipient to do something in anticipation of the conclusion of a contract:

– e.g. “please proceed to order materials”

• This may still not be enough to create a contract and there may be no obligation on the recipient to act on the letter

• If the contract is never concluded, then how will the works be paid for?

– Quantum meruit

– As assessment of what the work is worth to the sender of the letter

3 - Letters giving rise to a contractual entitlement

• These are more complex, and frequently give rise to disputes

• Will be styled ‘letter of intent’ but will typically contain certain ‘contractual’ detail

• A contract may arise in one of two principal ways:

– a unilateral or “if” contract; or

– a bilateral or “ordinary” contract

Precautions for use

• Letters of intent have a valid role – but do recognise their limitations

• Always proceed to a ‘formal’ contract

• Don’t over-rely on letters of intent – they’re not a replacement for a contract

• Is the letter intended to create binding obligations?

• If yes, to what extent and on what terms?

• Why not enter into a ‘proper’ contract?

Twintec v Volkerfitzpatrick [2014] EWHC 10 (TCC)

The practical issue:

• What is the effect of referring to a standard form contract in a letter of intent?

Twintec v Volkerfitzpatrick - the facts:

• Accolade’s warehouse and wine bottling plant built by VFL –Twintec, VFL’s subcontractor, constructs floor slabs

• Litigation by Accolade v. VFl, Twintec and others - floor unfit for purpose

• Testing by VFL of warehouse floor, costing £850,000

• VFL refers liability for these costs to adjudication, blaming Twintec's poor workmanship

• VFL/Twintec LOI – carry out works “in accordance with” documents listed, including DOM/2

• Twintec applied for an injunction on basis relevant adjudication provisions not incorporated into LOI

Twintec v Volkerfitzpatrick - LOI terms:

“It is our intention to award you the Warehouse Slab works for all

services as detailed within the documents listed below and

attached, for the above project, but we are not yet in a position to

enter into this Sub-contract.

Subject to the terms of this letter, we authorise and request you to

proceed immediately with all works necessary to enable you to

achieve the Design Programme and Construction

Programme in accordance with the documents below... Your

total Sub-contract Sum for this project... is agreed as

£2,630,564.59, for all works as further detailed within the attached

documents... Upon the issue of our formal Sub-contract

Agreement, this letter will cease to have any effect and will be

superseded by the terms and conditions of that Agreement.”

Twintec v Volkerfitzpatrick - The decision:

• Twintec could not be bound by DOM/2 conditions without benefit of sub-contract or opportunity to negotiate terms

• Twintec should be required only to carry out the work necessary to achieve the Design Programme and the Construction Programme (primary obligations) in a manner that complied with the documents referred to in the LOI

• Not necessary to incorporate secondary obligations, such as the nomination of the adjudication body, into the LOI (to be negotiated and agreed between the parties)

• Appointment of the adjudicator was invalid

Twintec v Volkerfitzpatrick - lessons learned:

• LOI with an obligation to perform works “in accordance with” a contractual document may be insufficient to incorporate such terms

• Simply referring to a standard form creates uncertainty

• Parties should address key provisions comprehensively in LOI and include primary and secondary clauses

• A formal contract should be signed as soon as possible to avoid any potential ambiguities

Your Turn!

• Cordial Construction and Dependable Developments

• Letter of intent ‘…to be read in conjunction with the

contract…. which shall form the basis of our agreement

for commencing and completing the work…’

• Is there a Contract?

Gillian Woodward

Liquidated Damages

Liquidated damages

• Fixing liquidated damages

• Amending the contract

• Termination

Traditional approach

Genuine pre-estimate of loss Penalty

Enforceable Not enforceable

Cavendish Square Holdings v El Makdessi

Court of Appeal:

“…the Court will grant relief against the enforcement of

provisions for payment…where the amount to be paid or lost is

out of all proportion…likely to be regarded as penal because

their function is to act as a deterrent."

Does the level of LDs "serve to fulfil some justifiable

commercial or economic function"?

Court of Appeal – El Makdessi

Extravagant and without sufficient commercial justification

Penal

Not enforceable

Appeal to Supreme Court awaited - 2015

Unaoil v Leighton Offshore

“…where…the contract is amended in a relevant respect, the

relevant date is, in my judgment, the date of such amended

contract…

…once the original contract price was reduced, it was, on any

objective view, "extravagant and unconscionable with a

predominant function of deterrence" without any other

commercial justification for the clause”

Bluewater Energy Services v Mercon Steel Structures

“…If [Mercon] fails to complete any of the items listed…in

accordance with the relevant date…[Mercon] shall be liable to

Bluewater for Liquidated Damages…

…Liquidated damages…shall finally be calculated over the last

milestone…and delays and liquidated damages on previous

milestones shall then be disregarded…”

Bluewater Energy Services v Mercon Steel Structures

“…the liability of Mercon to pay Bluewater accrues when there is

delay to one of the Milestones which attract liquidated damages.

That sum then is payable by Mercon to Bluewater….after

termination the right of Bluewater to be paid liquidated damages

does not continue but that does not affect accrued rights”

Vivien Welsh

Construction Act/Adjudication

Adjudication 1

• Value of the works

• Monthly payment rounds:

– Payment notices

– Pay less notices

• Adjudication ‘rounds’ on interim payment applications

ISG Construction v Seevic College


• Is it possible for a party who has lost a payment notice/payless notice adjudication to argue that there is a separate dispute about the ‘value’ of the works?

• If that separate adjudication is possible and successful, can it be set-off against the other?


The facts:

• ISG made an interim payment application after practical completion of the works

• Seevic College did not issue a payment notice and

were late in giving a pay less notice

• ISG initiated an adjudication seeking payment and Seevic College were ordered to pay the outstanding amount


The facts:

• Seevic College commenced a new adjudication to determine the value of the works

• The adjudicator found that the value of the work was less than that which ISG had been awarded in the first adjudication. The Adjudicator ordered repayment by ISG of the difference

• ISG brought proceedings for a declaration that the second adjudication decision was void because the second adjudication was the same or substantially the same dispute as that covered in the first adjudication


The decision:

• The decision in Adjudication 1 was enforceable and the decision in Adjudication 2 was void

• The first adjudicator was taken to have decided the question of the value of the works


The decision:

• Seevic College should have followed the payment regime if it wanted to dispute the value of the works done

• Seevic College did not serve a notice in time; it must therefore be taken to have agreed the value stated in the application, whether it was right or wrong

Adjudication 1

The lessons learned:

• Good news for ‘payees’

• Reminder to ‘payers’ that they must serve the required notices or they will have to pay the sum that the ‘payee’ has applied for

• But…limited application?

• See Harding v Paice (2014) and Galliford Try v Estura (2015)

Adjudication 2

• More competing adjudications…

• Same or substantially the same dispute?

• Choice of adjudicator

– Conflicts of interest

– Preferences

Eurocom v Siemens


• Summary judgment application including decisions on:

– fraudulent misrepresentation

– referring overlapping disputes to adjudication

– natural justice and the procedure to be adopted by an adjudicator

– when a stay of enforcement should be granted

Eurocom v Siemens

The facts:

• Siemens engaged Eurocom to install communications systems atCharing Cross and Embankment tube stations

• Dispute: delay, variations, prolongation and disruption

• First Adjudication: Matt Molloy awarded £35,283 to Siemens

The facts:

• Second Adjudication: Tony Bingham awarded £1.6m to Eurocom

• Eurocom commenced enforcement proceedings and sought summary judgment

• Siemens objected on four grounds

Eurocom v Siemens

Eurocom v Siemens

Four grounds of objection:

1. Appointment of the Adjudicator was invalid

2. Adjudicator 2 adjudicated on the same or substantially the samematters as had been referred to and decided in Adjudication 1

3. Adjudicator 2 adopted a procedure that breached the rules ofnatural justice

4. Stay of enforcement should be granted because of Eurocom’sfinancial position

• "Are there any Adjudicators who would have a conflict of

interest in this case?"

• Eurocom listed 13 individuals who should not be appointed,including Matt Molloy

• RICS did not copy the adjudicator application form to Siemensuntil January 2014

Eurocom v Siemens

The decision:

• Considered the “plain and ordinary meaning” of the question onthe RICS form and found there was a "strong prima facie" casethat Eurocom made a fraudulent misrepresentation

• The false statement was material, and invalidated Tony Bingham’sappointment; he therefore lacked jurisdiction to reach a decision

• Sufficient to defeat summary judgment application

Eurocom v Siemens

The decision:

• Parties entering into contracts do so on the basis that the otherparty will act honestly

• A party applying to RICS for an adjudicator should not actdishonestly

• Role of ANB is limited to proper exercise of discretion to make anomination

Eurocom v Siemens

Eurocom v Siemens

The decision:

• Significant overlap between Adjudications 1 and 2: impossibleto isolate new elements of claim

• Adjudication procedure: no breach of natural justice

• Stay of enforcement: yes, if summary judgment had beengranted, based on Eurocom’s financial status

Adjudication 2


• Referring parties should avoid identifying individuals on anappointment form whom they do not want the ANB toappoint for reasons other than a conflict of interest

• Another avenue for jurisdictional challenges may now havebeen opened

Adjudication 3

• Timing

• Contract provisions

• Adjudication procedure

University of Brighton v Dovehouse Interiors


• Saving provisions re conclusivity of the Final Certificate

• What is meant by the “commencement” of adjudication proceedings?


The contract terms:

"1.9.1 Except as provided in clauses 1.9.2 and 1.9.3 (and save

in respect of fraud) the Final Certificate shall be

conclusive evidence…

1.9.2 If any adjudication, arbitration or other proceedings are

commenced by either Party before or not later than 28

days after the Final Certificate has been issued, the Final

Certificate shall be conclusive evidence as provided in

clause 1.9.1 save only in respect of the matters to which

those proceedings relate”


The facts:

Final Certificate

issued

28 day period extended by agreement

Adjudication notice served

Wrong ANBWrong address for

University

Dec 13 13 Feb 14 14 Feb 14


The facts:

New Adjudication notice served

Declaratory proceedings commenced

?

24 Feb 14 25 Feb 14


The facts:

• University ran 4 arguments in support of its case that the Notice was ineffective to “commence” proceedings:

1. "commenced" by serving Referral

2. invalid notice: failed to comply with para 1(3) of the Scheme

3. no adjudication proceedings commenced

4. defects in notice and resignation of adjudicator


The decision on commencement:

Tracy Bennett v FMK Construction

• "For the purposes of clause 30.9.3 which provides a short time

period with a strict time limit, failure to comply with which leads

to serious consequences analogous to the consequences of

limitation provisions, ‘commencement’ must, in my judgment,

refer to service of the notice of intention. Delay in the

appointment of an adjudicator could lead to failure on the part

of an applicant to serve a referral notice within 28 days after the

issue of the final certificate through no fault on his part. It would

take clear words to that effect to lead to such a conclusion."


The decision on validity of notice:

• Court accepted that the Notice did not refer to the contractually specified address but was not persuaded that the contract required service at that address

• In any event:

"The authorities make it clear that not every breach of a

requirement of the Scheme is such as to render a notice

invalid.... Notice of Adjudication was given substantively

and effectively to the University at the [address used]. Its

substantive purpose of commencing proceedings was

achieved."


The decision on the ANB:

• Court held that the proceedings had been commenced by the Notice

• So, the suggestion that proceedings had not been commenced because of incorrect identification of the ANB fell away


The decision on the validity of the referral:

• University argued that an invalid referral through the fault of referring party cannot be cured

• Incumbent on the referring party to ensure that all matters within its control were implemented correctly

• Court held:

– saving provision was triggered by commencement

– once triggered, it remains in operation for any subsequent adjudication proceedings

Adjudication 3


• No guidance in the Act or Scheme re "commencement of

adjudication proceedings”

• Court came to a clear conclusion that proceedings “commenced” on service of the Adjudication Notice

• Technical irregularities with the Notice were unlikely to prevent a finding that proceedings had been "commenced" by service of that Notice

Adjudication 4

• Reliance on Court’s dislike of technical challenges

• High risk strategy

• Importance of timing again

Fermanagh District Council v Gibson


• Examination of provisions (NEC) stipulating that the adjudicator's decision becomes binding unless challenged within a particular time frame

• Application where aggrieved party does not accept validity of decision


The facts:

• NEC 2

• Adjudicator’s decision issued October 2012

• Clause 93.1:

"If after the Adjudicator notifies his decision...a Party is

dissatisfied, that Party notifies the other party of his

intention to refer the matter which he disputes to the

tribunal. It is not referable to the tribunal unless the

dissatisfied party notifies his intention within four weeks [of the Adjudicator's decision]"


The facts:

• FDC resisted enforcement:

– challenged adjudicator’s jurisdiction

– disputed quantum

• Enforcement proceedings:

– court rejected FDC’s case

– FDC commenced arbitration in February 2013


The facts:

• Arbitrator appointed and Gibson raised time bar

• FDC applied to extend time under clause 12(3) of the Arbitration Act 1996:

"The court shall make an order [to extend time] only if satisfied

(a) that the circumstances are such as were outside the

reasonable contemplation of the parties when they agreed the

provision in question, and that it would be just to extend time, or

(b) that the conduct of one party makes it unjust to hold the other

party to the strict terms of the provision in question."


The decision:

• FDC argued that it was illogical to commence arbitration

• Court rejected that argument:

– commencing arbitration is entirely

consistent with a jurisdiction challenge

– circumstances were not “outside reasonable contemplation

of parties”

Adjudication 4


• Unsurprising decision

• FDC’s approach = “high risk strategy”

• Court drew attention to conflict between clause 93.1 and ICE Arbitration Procedure

– “Notice of intention to refer”

– “Notice to refer”

Resolving Disputes Without the Courts

Kenny Hill

Why not use the Courts?

• Time

• Money

Resolving Disputes Without the Courts

• Negotiated Settlement

• Mediation

• Expert Determination

• Adjudication

• Arbitration

Key Issues

• Dispute resolution clauses

• Is there an obligation to mediate?

• Role of the Courts in conjunction with alternative methods of dispute resolution

• Entering into settlement agreements

Dispute Resolution Clauses

• A contractual mechanism to regulate how any dispute arising under a contract will be dealt with

• Single method of dispute resolution or a multi-tiered dispute resolution process

• Provides certainty (subject to certain exceptions such as the residual jurisdiction of the Courts and statutory adjudication)

• Important to get it right

Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014]

• Emirates Trading Agency (“ETA”) entered into a long term contract with Prime Mineral Exports (“Prime”) for the purchase of iron ore

• ETA failed to take up the expected amounts of iron ore in the first two shipment years

• Prime claimed liquidated damages, served notice of termination and referred the claim to arbitration in June 2010

Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd

• "In case of any dispute or claim arising out of or in connection

with or under this contract...the Parties shall first seek to

resolve the dispute or claim by friendly discussion. Any

party may notify the other Party of its desire to enter into

consultation to resolve a dispute or claim. If no solution can

be arrived at in between the Parties for a continuous

period of 4 (four) weeks then the non-defaulting party can

invoke the arbitration clause and refer the disputes to

arbitration".

Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd

• ETA objected to the arbitration arguing that clause 11.1 had not been complied with – there had not been a continuous period of weeks of negotiation

• Prime argued that article 11.1 was unenforceable as an agreement to negotiate, and in any event, had been complied with

• Court held that article 11.1 was enforceable but that on the facts “friendly discussions” had taken place for a period of more than 4 weeks

Obligation to Mediate

• [pic]

Obligation to Mediate?

• No obligation to mediate in UK jurisdictions

• Courts may encourage parties to mediate but are unable to force mediation (ADR Orders in England)

• Failure to mediate may attract adverse cost consequences if party has unreasonably refused to mediate (particularly in England)

• Difficulties with forced mediation

Phillip Garrit Critchley and Ors v Andrew Ronnan and Solarpower PV Ltd

• PG and Solarpower in dispute regarding the issue of shares and whether a binding agreement had been reached. Value of PG’s claim was £208k

• Prior to and during court proceedings, Solarpower continually refused to mediate because, in their view, the parties were too far apart

• 4 day trial took place, following which parties settled the matter before judgment was issued, for £10k

Phillip Garrit Critchley and Ors v Andrew Ronnan and Solarpower PV Ltd

• Costs of £161k were awarded against Solarpower on an increased scale

• Cases concerning quantum disputes which are not suitable for mediation or ADR will be rare

• Mediation should not properly be refused due to:

– “extreme confidence” in one party’s position; or

– a breakdown of personal relationships.

Role of the Courts in Conjunction with Alternative Methods of Dispute Resolution

Role of the Courts in Conjunction with Alternative Methods of Dispute Resolution

• Courts generally supportive

• Mediation: Courts will encourage mediation where possible

• Expert Determination: Parties will often agree that this is “final and binding” to give meaningful effect to the process and Courts will seek to enforce this

• Arbitration and Adjudication: Reluctance to interfere with decisions unless it relates to matters of jurisdiction or natural justice

Charles Henshaw and Sons v Stewart and Shields Ltd

• Henshaw claimed for payment of variations under the Sub-Contract

• Stewart & Shields claimed each ‘variation’ was in fact a separate, mini-contract so the Adjudicator did not have jurisdiction

• Adjudicator awarded Henshaw its full claim of c£33k


• Stewart & Shields refused to pay

• Henshaw commenced enforcement proceedings and won

• Stewart & Shields appealed not once, but twice

• Stewart & Shields lost both appeals


• The court confirmed that there is a very limited class of caseswhere it will refuse to enforce an adjudicator's decision:

– where the adjudicator has no jurisdiction; or

– where there has been a clear breach of the rules of naturaljustice.


• “To seek to challenge the adjudicator’s decision on the ground

that he has exceeded his jurisdiction or breached the rules of

natural justice (save in the plainest of cases) is likely to lead

to a substantial waste of time and expense.” [Carillion Construction v Devonport Dockyard]

• “The Adjudication procedure ought not to be derailed by the

pursuit of technical legal arguments, particularly where those

arguments are patently without merit.”[Charles Henshaw and Sons v Stewart and Shields Ltd]

Settlement Agreements

Settlement Agreements

• Parties reach a mutually acceptable compromise

• Should seek to encompass and tie up all aspects of the dispute

• Should be stated as final and binding to avoid any questions of enforceability

• Parties should seek to ensure that settlement negotiations are not misconstrued as agreement being reached

Mr Malcolm Newbury v Sun Microsystems

• Mr Newbury raised a claim against Sun Microsystems for contractual commission totalling over $2 million

• Sun Microsystems wrote to Mr Newbury with an offer of settlement, noting settlement was “to be recorded in a suitably

worded agreement.”

• Mr Newbury responded accepting the terms of the offer

• Sun Microsystems replied attaching a “waiver deed” containing amended terms of settlement


• Mr Newbury raised proceedings and argued that the parties had entered into a binding contract when he accepted Sun Microsystem’s offer

• Sun Microsystems argued this was only an agreement in principle

• The Court found that the correspondence gave rise to a binding contract

• Agreement was to be recorded in a suitably worded agreement but the execution of that agreement was not a condition


• Highlights the need to take care when negotiating terms of settlement

• Parties should be clear as to whether they intend an offer to be capable of acceptance

• An objective test: post contractual communications will not be taken into account

Take Home Conclusions

1. Give careful consideration to the dispute resolution clause best suited for your business

2. Parties are generally not under an obligation to mediate but a Court may look unfavourably on a refusal to do so

3. Courts will generally seek to support decisions reached when resolving disputes outwith the Courts

4. Exercise caution when entering into settlement agreements to ensure it captures the deal you want

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