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Employment Law

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Veale Wasborough Vizards , 19 JAN 2015

Can an email exchange constitute a binding agreement?

Can an email exchange constitute a binding agreement?
Helen Hughes
Solicitor, Veale Wasbrough Vizards

The High Court considered whether an exchange of emails between respective solicitors amounted to a binding settlement in Bieber and others v Teathers Limited (in liquidation).

Bieber invested in a series of film and television production schemes, formed by Teathers Ltd, which aimed to enable investors to take advantage of tax concessions and achieve a commercial return on their investments. The scheme failed and Bieber brought proceedings against Teathers for £20 million. Teathers was in liquidation and was only able to meet £10 million.

Prior to the trial for the above claim, Bieber accepted an offer of settlement from Teathers by email. The content of the email exchange focussed on the sum to be paid by way of settlement to Bieber. The parties however then failed to agree any further terms of a formal settlement agreement due to Teathers' insistence that there should be an indemnity in respect of any third party claims which had not been mentioned during the negotiations.

Bieber applied for a declaration that the parties had reached a binding settlement during the email exchange and notwithstanding that they were unable to agree the precise terms of the settlement, a concluded agreement had been reached.

The High Court granted Bieber's application.

It was found that, from an objective point of view, during the negotiations the parties had intended to reach a binding agreement without the need to agree further terms. The offer which Bieber had accepted by email was not expressed to be subject to contract and could not be construed as including this qualification.  

Best practice

Subject to the caveat below, the facts of this case are a reminder to employers when negotiating directly with employees, for example during the course of employment or during early conciliation, that any offers made in the course of settlement negotiations should be made 'subject to contract'.

It is important to note that the findings in this case are unlikely to apply to certain employment claims which can only be lawfully settled by a settlement agreement that meets the relevant statutory requirements.

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