Think Carefully About How You Respond To A Settlement Offer

Year Published: 2016

It is important for parties to consider settlement throughout a dispute, particularly one that is already in court. Court proceedings are expensive and time consuming, and although at times necessary, should be avoided or concluded early where possible. One way of achieving this is to think about a settlement offer.

As well as the tactical advantage, making offers is designed to try and reach a settlement.

It is often not appreciated that if you make a counter offer this is technically a rejection of the original offer. If that counter offer is then accepted it will in fact produce an entirely different contract from the one that may have been intended.

It may be the case that an offer is either unclear, does not cover every aspect of the dispute or leaves a logistical point unaddressed e.g. when payment would be made.

If you are faced with this it is better to seek clarification before you formally respond to an offer. If you respond with an acceptance but deal with unaddressed points or vary some of the points outlined in the original offer, then this would be a counter offer and therefore a rejection of the original offer.

Gibbs v Lakeside Developments: a settlement offer not thought about carefully enough

In the recent case of Gibbs v Lakeside Developments Ltd [2016] EWHC 2203 (Ch) the court had to decide what would happen when a response to an offer included a conflict between the content of an email and its attachment.

In this case the email was written as an acceptance of the offer but a consent order was attached varying the time for payment.

The court ruled that this was technically a counter offer and therefore a rejection of the original offer.

What could this mean for your settlement offer?

This could be important for a number of reasons. If a settlement is not reached further expense may have to be incurred, particularly if there is a court timetable in place. Alternatively you may lose the original offer that was on the table if the other party is not prepared to offer it again.

You must therefore think carefully when responding to an offer. If matters are unclear or a necessary aspect of the dispute is not addressed, seek clarification.

If you want to accept the offer you must unequivocally accept each point in the offer.

Finally, the other lesson to learn from the above case is that your communication will be taken as a whole. So be careful what you attach, particularly to emails.

For further advice on a settlement offer or any other dispute resolution matter, please contact team on 0161 475 7676.

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