Settling disputes: back to basics

A recent High Court case has highlighted that when a party wishes to accept a settlement offer, it needs to accept the terms exactly as offered by the offering party. Any alteration of those terms amounts to a counteroffer and no settlement will have been reached.

The background to the matter is of little relevance. However the Claimant's claim was dismissed at a County Court trial and the Claimant was granted permission to appeal. In the run-up to the hearing of the appeal, the parties considered whether a settlement could be reached.

On 1 March 2016, the Claimant wrote to the Defendant's solicitors stating the following:

"The minimum sum I will accept is the sum of £90,000 with each party to bear its own costs, provided that (1) this offer is accepted by no later than 4pm on Wednesday, 9 March 2016; and (2) the monies are transferred into an account nominated by me before 4pm on Wednesday 16 March 2016."

On 8 March 2016, the Defendant's solicitors responded:

"The claimant accepts your offer. I attach a draft consent order for your consideration and approval. … I consider that the consent order does deal with all the relevant matters, but if you or your barrister … disagrees kindly let me know."

However, the consent order attached to the email had a different date for payment of the £90,000. The parties disagreed over whether a settlement had been reached.

The judge held that that the Defendant's solicitors' email was not an acceptance of the offer, but rather a counter-offer. The Claimant appealed and the High Court dismissed her appeal.

The High Court described the offer as a 'package', namely that, firstly, there was acceptance of the offer to accept £90,000 in full and final settlement of all claims by no later than 4pm on Wednesday 9 March 2016 and that, secondly, payment must be made by transfer to an account nominated by the Claimant before 4pm on 16 March 2016.

The Court held that the Defendant's solicitors' email did not accept the package as, taking the email and the attached consent order as a whole, an alternative payment date was provided. As such, it was a counter-offer which amounted to a rejection of the original offer.

This case illustrates the traps into which parties can fall when settling disputes and the benefit of instructing solicitors early in a dispute to ensure that when a party wishes to accept terms of settlement, that settlement is reached without complication.