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"noted, with thanks” - the perils of negotiating settlement agreements

12 January 2015

A recent decision stresses the importance of expressly stating when a settlement offer is intended to be ‘subject to contract’ (ie not binding until a formal written agreement has been executed).

In Bieber and others v Teathers Limited (in liquidation) the claimants accepted – via email – a settlement offer relating solely to the sum to be paid by the defendants, and stated that they would circulate a draft consent order. The defendant replied “noted, with thanks”. Subsequently, the claimants provided a draft consent order; in response, the defendants proposed a long-form settlement agreement (which included an indemnity for third party claims to the defendant), which the claimants refused to sign.

The judge found that whilst previous offers had been expressed to be subject to contract, the accepted offer was not and no such qualification could be inferred. Strikingly, the judge held that “noted, with thanks” suggested no further terms had to be considered (the defendant should have referred to the remaining issues to be dealt with before an agreement could be concluded). The whole course of negotiations did not suggest that settlement required a signed formal agreement; the offer was clearly intended to include all claims, counterclaims and costs, without any previous attempt to reserve third party claims. It did not matter that the underlying litigation was complex; settlement of the dispute was not.

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