It is not uncommon for parties to settle small debts amongst themselves. We are generally very supportive of this, as it can mean that you save costs and time. However, you should be careful when committing a settlement to writing, especially with larger debts.

We have had clients come to us after reaching what they thought was an agreement, only to end up in Court because they did not properly protect themselves, or secure their debts.

For example, have you considered exactly what a contract is? There are many elements to any offer you may wish to make that you might not have even considered. The existence of an agreement, generally, requires three essential elements:

1. An Offer- which is typically an indication by one party to another of his or her willingness to be legally bound or enter into a contract with that other person, on certain terms.

2. Acceptance – being the unqualified agreement to the terms of an offer.

3. Consideration – the payment being made; something must be given in return for a promise in order to make it binding.

So, when might an offer not be an offer?

These elements may seem straightforward enough. However, a situation might arise where you think you have made an offer, but you have just invited the other party to make an offer or enter into negotiations. The court may decide that you instead made an “invitation to treat” for example, and that you never had reached an agreement.

This can sometimes have dire consequences for client, who may think they have settled a debt and even paid what they thought to be the “agreed” amount, only to have their creditor continue to recover against them for the balance.

Be careful when making or accepting offers. Praxis Lawyers is able to provide you with advice and assistance when entering into negotiations, feel free to call us if this is something you require help with.

What are “Without Prejudice” Offers?

Without Prejudice correspondence is a relatively technical area of the law, which we will address in a later blog.

Marking correspondence “without prejudice” provides some protection to the sender of the correspondence, such that it cannot be used by the receiver in Court. It typically only applies in circumstances where the sender is making genuine attempts to settle a dispute.

You should be careful when making a without prejudice offer. You will often hear people say that such correspondence cannot ever be relied upon in Court; which is broadly true, with some caveats.

There are circumstances where without prejudice correspondence can be relied on it Court, even if they are made in the interests of resolving a dispute.

What is a Deed of Release?

You may be asked, as part of a settlement arrangement, to sign a deed of release.

A deed is different to a contract, in that it does not require consideration for it to be binding. It does have some formal requirements however before it can be deemed to be effective; including the requirement that the parties’ signatures are witnessed.

Many deeds are complicated and technical documents. They will also often include requirements for indemnities, and sometimes even securities (such as mortgages or charges over company property).

Given the technical nature of a deed, and the likelihood that rights and obligations in a deed will be of a serious nature; we strongly recommend that legal advice is obtained before any deed is signed.

Praxis Lawyers are experienced in the areas of litigation and commercial advice. We can assist with any settlement you may be involved in, including negotiations and mediations. We also have a library of commercial documents at our disposal (including deeds of release) which allow us to provide our services efficiently and practically.