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chris-hadrill-profileChris Hadrill, a specialist employment solicitor at Redmans, answers the question:

“Can I set aside the term of the settlement agreement that I entered into if I think that I have been defrauded? I was made redundant and now believe that there wasn’t in fact a redundancy situation”

Under the law of contract, there are certain defined circumstances whereby a settlement agreement may be invalid and can be set aside. These include (but are not limited to):

  • Where a party to the settlement agreement lack capacity (for example, the party has a mental disability which rendered them incapable of understanding or consenting to the agreement);
  • Where a mistake has been made about a fundamental matter or which makes it impossible to perform the settlement agreement; and
  • Where there has been a misrepresentation of a material fact in certain circumstances

In this case, the relevant question is whether a settlement agreement can be set aside due to a fraudulent misrepresentation by one party to another, inducing them to enter into the settlement agreement (i.e. that there was a genuine redundancy situation when, it is contended as a matter of fact, this was not the case).

In Hayward v Zurich Insurance Company plc [2015] EWCA Civ 327 the Court of Appeal held that, while the settlement of an ill-founded claim is nonetheless binding, this is not generally the case if the claim was fraudulent: if, subsequent to the completion of the settlement agreement, it is found that a statement about the claim was in fact fraudulent when the other party had believed it was genuine, this may be sufficient to rescind a settlement agreement. However, fraud does not necessarily ‘unravel all’, even when proved – if the party alleging fraud (“A”) was aware (prior to the settlement agreement being completed) that the representation made by the other party (“B”) may not be true but signs the agreement anyway, this will not be sufficient to unravel the settlement (as A had settled the case “with its eyes wide open”).

Applying the above principles to the current question, the crucial issue in the circumstances is whether the person alleging fraud (“A”) was aware – prior to entering into the settlement agreement – that there may not be a genuine redundancy situation at his employer (“B”). If A had alleged to B that there was not a genuine redundancy situation prior to entering into the settlement agreement, but subsequently entered into the agreement anyway, then it is probable that A would find it difficult to challenge the validity of the settlement agreement on the grounds of fraud: A had entered into the settlement agreement with “his eyes wide open”. However, if A had not alleged dishonesty by B from the outset then he may be able to challenge the settlement agreement on the grounds of fraudulent misrepresentation (depending, of course, on A being able to show on the balance of probabilities that the statement by B to this effect was fraudulent).

The practical outcome of this question is that parties need to take care about alleging fault or dishonesty prior to settling a dispute. Further, they also need to understand the implications of settling: advice from specialist legal advisers on this point will therefore normally be extremely helpful in determining the pro’s and con’s of settling a case.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog.

Contact Chris by emailing him at chadrill@redmans.co.uk

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Testimonials

4.52 Average

21 Reviews

Redman's provided excellent legal employment advice for me during a difficult time in my employment. Chris was my lawyer, super efficient, quick, reliable and clearly very experienced in the matter. Could not ask for a better law firm to deal with your query if you are in need of some help. Would definitely use them again in the future. Highly recommending Chris.

Posted 3 weeks ago

Steven

Chris Hadrill was very professional and responsive. I would highly recommend him

Posted 4 weeks ago

Dinah

Very Efficient, with very quick email reply’s. I had a matter that needed resolving within a very short space of time and Redmans Solicitors were great with dealing with my matter quickly.

Posted 1 month ago

Ankar

At Redmans the solicitor that was dealing with me was Chris. He dealt with my situation smoothly with clear guidance and explanation

Posted 1 month ago

Anonymous

Clear, concise advice and guidance delivered by an experienced and very capable solicitor, within the timelines required

Posted 1 month ago

Anonymous

Very efficient service. I never had to wIt for more than a day for a reply to any of my queries and the matter was dealt with swiftly.

Posted 1 month ago

Anonymous

Very timely, thorough and helpful advice. Friendly and considerate of the needs of the client

Posted 1 month ago

Anonymous

Very prompt and attention to detail. Thank you for the service

Posted 1 month ago

Chris

Couldn’t be happier with how Redmans successfully handled our seemingly tricky case. By being clear and detailed every step of the way, with the utmost professionalism and courtesy, they made it an informative and eye-opening process, taking the stress out of the situation and ultimately delivered what you would want from such a service. I fully appreciate everything they have done, and if I am ever in need of such services in the future, they will be the first number I contact. Excellent.

Posted 1 month ago

Anonymous

Excellent work delivered with great quality

Posted 1 month ago

Dominic

Chris Hadrill was a great help both in terms of his advice and his expertise. He explained my options to me clearly and concisely enabling me to quickly make the right decision for me in the circumstance. I would not hesitate to recommend Chris or Redmans to friends or colleagues, and would certainly make Redmans my first port of call should I require a similar service in the future.

Posted 1 month ago

Kurt

Redmans gave excellent advice and helped me understand everything in clear concepts. Thank you!

Posted 1 month ago

Anonymous

Resolved my issues

Posted 1 month ago

Keith

Quick fast professional service.

Posted 1 month ago

Michael

"Prompt, efficient and practical advice that resulted in me getting some additional money tax free."

Posted 1 month ago

Anonymous

Patient and thorough advice given to me around my Settlement Agreement

Posted 2 months ago

Anonymous

"Excellent service, getting back to you promptly giving you very good advice."

Posted 2 months ago

Anonymous

I found Chris Hadrill to be an excellent help, he is very knowledgeable and gives good ,concise ,strategic advice .He makes himself readily accessible when you need him.I would personally highly recommend him.

Posted 2 months ago

Christine

Professional, efficient and reliable service provided. I strongly recommend them and I would use this service again.

Posted 2 months ago