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chris-hadrill-profileIn this post, employment law solicitor Chris Hadrill examines the circumstances in which it is possible to set aside a settlement agreement.

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):

  1. 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)
  2. Where there is no valid or complete agreement;
  3. Where there has been duress or undue influence;
  4. Where the settlement agreement is illegal as a result of statute or the general law;
  5. Where a mistake has been made about a fundamental matter or which makes it impossible to perform the settlement agreement; and/or
  6. Where there has been a misrepresentation of a material fact in certain circumstances

We will look briefly at each of the above points briefly in this article today – we’ll then look at each point in-depth in further articles in the future (note: I explored the effect of a fraudulent misrepresentation in this post).

Where a party to the settlement agreement lack capacity

A contracting capacity must have capacity to enter into a settlement agreement (or, indeed, any form of contract). Although the law presumes that every person has capacity to contract there are three categories of individuals who may lack person contractual capacity:

  1. Minors
  2. People lacking the requisite mental capacity
  3. People who are drunk at the time of entering into the contract

With regards to corporate entities, company directors have the power (free of any limitation under the entity’s constitution) to enter into contracts with third parties, as do other persons authorised by directors. It is not incumbent upon a third party dealing with a corporate entity to make inquiries as to whether a director has the power to bind the company or authorise others to do so.

Where there is no valid or complete agreement

If the settlement agreement has not been properly completed then it may be possible to set aside the agreement.

Where there has been duress or undue influence

Where a party’s consent to a contact has been induced by duress, the contract is voidable by the ‘aggrieved party’. A threat sufficient to constitute duress could be actual or threatened violence, unlawful restraint to the person or property, or it could be an economic threat (such as a threat to terminate a contract). If there has been such a threat then this may invalidate the terms of a settlement agreement.

Where the settlement agreement is illegal as a result of statute or the general law

Illegality could arise if the terms of an agreement contravene established statutory or common law principles or, alternatively, if the terms are contrary to public policy. For example, contracts that fix prices are prohibited under the Competition Act 1988.

If a court becomes aware of illegality the it may have the right to set aside the agreement and refuse to award any remedy (in the event of an alleged breach).

 

Where a mistake has been made about a fundamental matter or which makes it impossible to perform the settlement agreement

If there has been a mistake in a settlement agreement then the effect of this mistake depends upon the circumstances: depending upon various factors, a party could be bound by the mistake or, alternatively, the settlement agreement could be declared void. Whether a party will succeed in such an argument depends to a great extent on whether the mistake (if any) renders the contract impossible to perform or radically different from what it actually is.

 

Where there has been a misrepresentation of a material fact in certain circumstances

If there has been a misrepresentation of a material fact (whether this representation was fraudulent, negligent or innocent) then it may be possible to set aside the settlement agreement.

If you have entered into a settlement agreement with your employer and believe that the agreement should be set aside then please don’t hesitate to contact us to explore what action you could potentially take.

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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2 Responses to Employment law solicitor Chris Hadrill on the circumstances where it is possible to set aside settlement agreements

  1. […] the Employment Tribunal – one of these statutory requirements is that the agreement be valid: as addressed in this article, a party can argue that a settlement agreement is invalid if, for example, a party did not have […]

  2. […] This article summarises the circumstances in which a completed settlement agreement can be set aside […]

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    Anonymous

    I dealt with Chris Hadrill who was very knowledgeable and professional. To provide some context, I raised a grievance with my Employer and with the help of Redmans received a settlement offer. I have secured alternative employment and would recommend Redmans overall. I was very satisfied with the service I received and would rate it as 5 star.

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    I contacted Redmans in regards to a situation I needed dealing with with my employer. This was resolved within a week of initial contact and I couldn’t be happier. Both Chris and Sacha were brilliant and couldn’t have been more helpful! Thanks guys!

    Posted 1 day ago

    Anonymous

    Quick proccessing of my Redundancy agreement.

    Posted 4 days ago

    Anonymous

    Fantastic support during a difficult time! Chris was fantastic, from the first conversation all the way through a difficult process. Chris supported me with a settlement agreement and his counsel was invaluable. The company I worked for tried to suggest some solicitors that they knew would simply rush through an agreement. Thankfully I found Chris and the Redmans team, what a relief! They fought for me and allowed me to keep my focus on the next stage in my career journey. If I go through anything similar in the future Redmans will be my first point of call!

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    Quick responses to all inquiries. Supportive and provided top-notch service. Extremely pleased with the outcome and would recommend to anyone in need of legal advise.

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    Great and prompt service- would recommend and use again!

    Posted 1 week ago

    Emma L

    Excellent service. From start the team where efficient and helpful, the whole process was made easy on a very stressful and upsetting situation. They worked well to support my situation and negotiate. Would highly recommend. Thank you to Chris, Sacha and the team.

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    I must say, not seeing any of you and doing all on-line works very well. Very pleased with the service and would recommend you. Fantastic service. Many thanks Brian Haines

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    Professionals with excellent quality of work.

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    I recommend Redman's Solicitors. Chris was very helpful and informative. He provided a speedy and efficient service at a reasonable price.

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    Anonymous

    Overall I was very satisfied with the service I received. Right from making initial contact to being contacted by Chris Hadrill. He was easy to talk to, friendly and professional and gave sound advice. I would certainly use Redman's again. Thank you for all your help, Chris. I would rate my experience as 5 star.

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    4 stars for quality of advise. the team are good but it feels rushed sometimes and hard to contact.

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    Arabella B

    I am so grateful to Caroline Lewis at Redmans Solicitor’s for helping me with my Unfair Dismissal Case. I was seriously impressed how easy Redmans made the whole case, and am very happy with my Settlement. I have recommended your firm to at least 5 people in the last 3 months.. Thank you Caroline and everyone at Redmans. You are Brilliant .

    Posted 1 month ago

    Anonymous

    Highly professional and efficient service.

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    I had the pleasure of Chris and Sacha’s experience with a work matter. They made me feel at ease with the process and explained everything thoroughly. Would happily recommend Redmans especially Chris and use them if needed I’m the future. Thank you!

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    Anonymous

    I used the services of Redmans solicitors and was a quick outstanding service I engaged them in a settlement agreement after been made redundant extremely professional at all that was done and would definetly use them again

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    Adrian A

    Spot on support, enough to get the matter at hand sorted. No beating around the bush, no nonsense - got the job done and we all moved on.

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    Five Stars I was most impressed by the attention, courtesy, speed and above all, professionalism in dealing with my Settlement Agreement. I would certainly have no problem in recommending this firm to anyone in need of their services.

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