Is your “Full and Final” settlement agreement really Full and Final?

The End

The Court of Appeal has recently ruled that a full and final settlement agreement reached between a Solicitor and its former client regarding unpaid legal fees should prevent the former client from pursuing a £70 million negligence claim against the Solicitors.

The former client naturally argued that the purpose of the agreement was only to settle the dispute around legal fees and that, at the time of the agreement, the £70 million negligence claim was unknown so couldn’t have been included in the settlement.

However, the written terms of the settlement agreement stated that it was in full and final settlement of all claims which the parties could have against each other, including unknown claims, those coming into existence at some time in the future, and those not in the parties’ contemplation at the time of the agreement.

As the agreement related to claims arising out of or in connection with the Solicitors’ invoicing (and therefore the legal services underlying that invoicing), it was conceivable that the negligence claim might overlap with the subject of the settlement agreement.

The CoA Judge therefore ruled that the specific wording used within the settlement agreement was sufficiently wide enough to catch the subsequent negligence claim, regardless of the fact that no claim had been asserted at the time of the settlement agreement.

Matthew Howat, Commercial & Dispute Partner at Howat Avraam Solicitors, comments: “This sort of widely drafted catch-all clause is not uncommon within settlement agreements but parties need to be aware of the double-edged sword of such a clause.  Contracts are there to protect parties so need to be thoughtfully drafted taking into account all of the risks that might arise and being careful not to inadvertently compromise a valuable future claim”.

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Howat Avraam Solicitors provide Commercial, Employment and Contract Dispute advice to companies and business owners.  As business owners ourselves, we have a pragmatic in-house approach to resolving issues before they arise by working alongside our clients, often on monthly retainers.  We are commercial, practical and entrepreneurial in our approach to legal services.

To discuss any commercial or legal matter on a no obligation basis, please contact Matthew Howat, Company and Disputes Partner, on 020 3735 6700 or email Matthew at Matthew.Howat@hasolicitors.co.uk.  Alternatively, visit our website at www.howatavraamsolicitors.co.uk.

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