M&A Diligence: can a settlement agreement be reached by way of an email exchange?
In Bieber and others v Teathers Limited (in liquidation)  EWHC 4205, the court has held that an exchange of emails between the claimants’ and defendants’ respective… Read more
In Bieber and others v Teathers Limited (in liquidation)  EWHC 4205, the court has held that an exchange of emails between the claimants’ and defendants’ respective solicitors constituted a binding settlement in relation to litigation, and that a formal settlement agreement was not necessary.
By way of background, the parties had been involved in complex litigation regarding a failed investment scheme. Following mediation, the claimants accepted by email an offer of settlement from the defendant (in each case, through their respective solicitors), such offer focussing solely on the monetary sum to be paid to the claimants (£2 million).
In accepting the offer on 29 June 2014, the claimants’ solicitors stated that they would “send round a draft consent order in the morning”, to which the defendants’ solicitors responded “Noted, with thanks”. The claimants’ solicitors circulated the draft consent order as promised, but the defendants sought an addition to the consent order in the form of an indemnity, which the claimants refused to give. The claimants’ solicitors then asserted on behalf of the claimants that the claims had been settled by the agreement contained in or evidenced by the exchange of emails on 29 June 2014.
The court was asked to consider whether the parties had reached a concluded agreement and, if an agreement had been reached, whether the agreement had been subject to contract, despite not being expressly stated as such.
The judge held that:
- the parties had settled the proceedings by an agreement contained in or evidenced by an exchange of emails on 29 June 2014, whereby it was agreed between the parties that the claimants would accept the sum of £2 million in full and final settlement of the claims, counterclaims and costs claims by and between the parties to the proceedings;
- though a consent order to effect that agreement was contemplated by the parties, there was no condition that a formal settlement agreement needed to be entered into by the parties. The exchange of emails constituted the agreement between the parties;
- during the course of negotiations, the defendant had not attempted to reserve its position in relation to the indemnity; and
- the offer accepted by the claimants was not expressed to be subject to contract and could not be construed as being subject to such qualification, a position supported by the conclusive response of the defendants to the claimants’ email on 29 June 2014.
This decision provides a cautionary tale for those negotiating settlements – if parties intend a settlement offer to be subject to contract, this should be expressly stated in all correspondence.