Settlement Agreement not worth the paper it’s written on

In the recent decision in Mionis v Democratic Press SA [2014] EWHC 4104 (QB) (5 November 2014) the High Court has found that a clause in a settlement agreement was too vague and uncertain to be enforceable, therefore, it could not hold the defendants to be in breach of its provisions.

In a libel action, the parties had entered into a settlement agreement which included an undertaking by the defendants not to publish any articles or statements which “refer” to the claimant or his “immediate family”. The claimant subsequently alleged that the defendants were in breach of its terms by publishing articles in which he was not named but could be identified because he was so closely associated with the underlying story. He sought an injunction to enforce the provision in the settlement agreement.

The judge construed the clause as embracing indirect references as well as direct ones. However, he stated that the clause also needed to be construed in the context of the relevant background. This included the defendants’ duty to report accurately and fairly on the story in question. The judge concluded that the difficulties of interpreting the scope of the restrictions imposed by the clause (and, in particular, what might amount to an indirect reference), that would arise almost every time an article on that subject was contemplated, rendered the clause too vague and uncertain to be enforceable. He emphasised that “what a contracting party is required to do or to refrain from doing needs to be spelt out clearly, and especially so when it is sought to limit the right to communicate information and ideas.” As a result, he could not hold the defendants to be in breach of the terms of the settlement agreement.

Although it is widely known that a provision in a settlement agreement which is too vague will be unenforceable, there are relatively few recent decisions which illustrate this.

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