Springhouse Solicitors

Were the parties bound by settlement agreed between their solicitors by email?

Yes, said the court in the case of Bieber & others v Teathers Ltd (in liquidation).

Background

During negotiations, the claimants in this matter accepted a settlement offer from the defendant, by email. The offer focused exclusively on the sum to be paid to the claimants and in the acceptance email, the claimants’ solicitor indicated that they would be circulating a draft consent order to which the defendant’s solicitor responded “noted, with thanks”.

When the draft consent order was received, the defendant’s solicitors sent a long settlement agreement to the claimants’ solicitor containing an indemnity against third party claims. No agreement could be reached on this.

The claimants then applied to the court for a declaration that the exchange of emails between solicitors amounted to a binding settlement of the proceedings.

The court concluded that:

  1. The parties had intended to reach a final and binding settlement on the exchange of emails, without the need to agree further terms. The agreement was not subject to contract. It was expressed to be in full and final settlement of all claims between the parties, counterclaims and costs.

Negotiations were not conducted in a two-stage manner whereby a figure was agreed before all other terms. There was nothing complex about the settlement negotiations that meant that settlement could only be reached when the parties had signed a formal agreement.

  1. The response “noted, with thanks” suggested that no further terms had to be considered. During the course of negotiations, the defendant’s solicitor had made no attempt to reserve its position in relation to third party claims.

Implications

This case serves as a stark reminder of the importance of ensuring that where there is agreement to settle in principle and that agreement also depends on the agreement of further issues, this fact must be made clear throughout communications.  If parties intend an offer to be subject to contract, then this should be expressly stated.

This decision is also a clear example of where findings of fact have been made by the court based on inconsistencies between oral evidence and the contents of contemporaneous documents. The case highlights the need to maintain good practice when recording details of conversations in attendance notes and on file.