Settlement agreements are frequently used to resolve disputes without the need for court proceedings. They are designed to provide certainty and finality between parties who wish to avoid the time cost and uncertainty of litigation. However where one party fails to comply with the agreed terms enforcement action may become necessary. In England and Wales a settlement agreement is generally treated as a legally binding contract provided that the essential elements of offer acceptance intention to create legal relations and consideration are present.
Settlement agreements are commonly entered into in the context of commercial disputes property litigation employment matters and debt recovery claims. Once the agreement has been signed by the parties it creates enforceable obligations. A failure to comply with those obligations may amount to a breach of contract entitling the innocent party to pursue remedies through the courts. This may include circumstances where a party fails to make payment by an agreed date or refuses to perform a specific obligation that was set out in the terms of settlement.
Settlement Agreements Are Binding Contracts
Once executed a settlement agreement imposes legal obligations on the parties. These obligations may include the payment of a specified sum by a certain date compliance with certain undertakings or the performance of particular acts. In England and Wales the courts will generally seek to uphold settlement agreements in order to promote certainty and avoid unnecessary litigation.
If one party fails to perform their obligations under the agreement this may amount to a breach of contract. The innocent party may then be entitled to bring a claim for damages or seek to enforce the agreement through court proceedings. The precise remedy available will depend on the nature of the breach and the terms of the agreement itself.
Settlement agreements may also be incorporated into a court order such as a Tomlin Order which allows proceedings to be stayed on agreed terms. In such cases the settlement agreement forms part of the court order and may be enforced by application to the court without the need to issue fresh proceedings.
Enforcement Options Available To The Innocent Party
If a settlement agreement has been breached the innocent party may pursue a range of remedies depending on the circumstances of the case and the nature of the obligations that have not been fulfilled.
These may include:
• Issuing a claim for damages arising from breach
• Seeking an order for specific performance
• Applying for an injunction to restrain certain conduct
• Enforcing the terms of a Tomlin Order
• Pursuing judgment for unpaid sums
Where the agreement was incorporated into a Tomlin Order the court may enforce the terms of settlement without requiring a new claim to be issued. This can provide a more efficient and cost effective route to enforcement.
In cases where the agreement has not been incorporated into a court order it may be necessary to issue fresh proceedings for breach of contract in order to obtain judgment for the outstanding sums or performance of the agreed terms.
Claim For Damages Arising From Breach
Damages may be awarded by the court in order to place the innocent party in the position they would have been in had the settlement agreement been properly performed. This may include any unpaid sums due under the agreement together with interest and legal costs incurred in pursuing enforcement.
The court will consider the terms of the agreement and the nature of the breach when determining the appropriate level of damages. In some cases the agreement itself may contain provisions relating to interest or costs which may be enforceable subject to reasonableness.
Commencing Court Proceedings For Enforcement
If enforcement action is required proceedings may be issued in the appropriate court depending on the value and complexity of the claim. In England and Wales claims for breach of settlement agreement are generally treated as claims for breach of contract. Time limits may apply under the Limitation Act 1980 and it is therefore important to seek legal advice promptly if a breach has occurred.
In addition to issuing proceedings the innocent party may also consider enforcement options once judgment has been obtained. These may include applying for a charging order against the debtor’s property seeking an attachment of earnings order or instructing enforcement agents to recover the outstanding sum.
Failure to comply with a settlement agreement can undermine the certainty that the parties sought to achieve when resolving their dispute. Taking prompt legal advice may assist in identifying the most effective course of action and ensuring that the terms of the agreement are enforced.
If the other party has breached a settlement agreement prompt legal advice is essential in order to protect your position and recover the sums owed to you.
Contact Penerley Solicitors today to enforce your settlement agreement and recover the sums owed to you.
