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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

4.76 Average

164 Reviews

Samantha K

Absolutely brilliant thank you. Caroline Lewis is a legend

Posted 2 weeks ago

Anonymous

The legal advice was clear and helpful.

Posted 2 weeks ago

Davinder P

Good Service

Posted 2 weeks ago

Adrian V

I was using Redmans services for a Settlement Agreement. Very quick and professional service. The outcome was favourable and I was very pleased with the amendments and results. Pretty glad to recommend them for any type of legal advice.

Posted 2 weeks ago

Anonymous

Very responsive, efficient, clear and supportive. Thank you! Highly recommend.

Posted 2 weeks ago

Tiago S

Chris was always prompt to help me with legal matters that are beyond my comprehension and very helpful leasing with my former employer. I would recommend Redmans Solicitors to everyone who needs help.

Posted 2 weeks ago

Anonymous

Fast and professional advice tailored to what was needed. Thanks for your help Chris Hadrill and team.

Posted 2 weeks ago

Peter S

Really pleased with the outcome and the advice I had from Chris and Sacha.

Posted 3 weeks ago

Harika A

Redmans solicitor's helped me with my settlement agreement, Chris has been very helpful throughout the process.He was very prompt in his responses and made my settlement look simple.Special thanks to Caroline for her efficient communication, thorough explaination of contract terminology and negotiations.I highly reccommend Redmans solicitors for anyone seeking employment related legal help.

Posted 3 weeks ago

Anonymous

Good and quick service

Posted 3 weeks ago

Ricky D

Very satisfying to be assured of such attention and professionalism.

Posted 3 weeks ago

Anonymous

Excellent service - thankyou

Posted 3 weeks ago

Anonymous

Efficient, timely and friendly support and advice

Posted 3 weeks ago

Ahmed S

They are always on hand when you need them and provide support even when its not necessary.

Posted 3 weeks ago

Nemen S

Wonderful experience.Chris was very responsive and provided an excellent service. A real professional who I would recommend to anyone

Posted 3 weeks ago

Anonymous

Their guidance was clear and they provided me with all the information I required. Friendly yet professional

Posted 3 weeks ago

Anonymous

Chris @ Redmans assisted me with an employment issue. Firstly, he was very proactive in coming back to my initial enquiry and then helped to clearly lay out the options that I had in relation to my position. He then assisted with the preparation of my case, which led to a very satisfactory outcome. I would highly recommend the quality of service & professionalism offered by Redmans Solicitors.

Posted 3 weeks ago

Anonymous

Great service

Posted 3 weeks ago

Anonymous

Chris was very effective and decisive in dealing with my matter. I felt guided, and the pressure to make decisions was taken off my shoulders; he knew what needed to be done and I was happy to follow his advice. The result of the legal dispute was a great success for me. He is also kind and personable. The only thing that I would say it could be improved, is the accuracy of cost estimation at the beginning: not many activites, that could not have been forseen had to take place, but costs went up more than double in the end. Overall very good and trustworthy. I would definately recommend and use Redmans services again.

Posted 3 weeks ago

Liz P

An excellent professional service was provided by Chris Hadrill and Mel Chin. Efficient and trustworthy - would highly recommend this company.

Posted 1 month ago

Anonymous

Redmans Solicitors were great. They were able to advice me quickly and efficiently! I would recommend them, as a good solicitors to use.

Posted 1 month ago