Legal update: Beware! An exchange of emails could constitute a binding settlement

Bieber and others v Teathers Limited
In Bieber and others v Teathers Limited, the parties’ respective solicitors agreed a figure for settlement of a claim, by email, without either side expressing that the correspondence was “subject to contract”. On an objective assessment of the relevant facts and circumstances, the High Court judge held that this exchange of emails constituted the full and final settlement of the claims, counterclaims and costs claims by and between the parties and therefore the exchange of emails alone constituted a binding settlement without the need for a settlement agreement to document the agreed terms. This meant that the company was unable to rely on an indemnity which it wanted to include in a settlement agreement and it could not attach any other conditions (such as confidentiality), to the terms of settlement.

This case provides an important reminder to employers who are negotiating the terms of an employee exit or settlement of a case, to always explicitly state that correspondence regarding settlement terms is “Without Prejudice and Subject to Contract” until a settlement agreement is signed. This should minimise the risk of being unintentionally bound by settlement terms and give you the opportunity to further agree ancillary terms by negotiating the terms of a settlement agreement in the usual way.