Settlement agreements—interpretation
Produced in partnership with Helen Swaffield of Contract Law Chambers
Settlement agreements—interpretation

The following Dispute Resolution guidance note Produced in partnership with Helen Swaffield of Contract Law Chambers provides comprehensive and up to date legal information covering:

  • Settlement agreements—interpretation
  • A binding settlement—the interpretation of a settlement agreement
  • A binding settlement—terms may be implied
  • A binding settlement—without prejudice documentation is admissible
  • A binding settlement—comprehensive scope
  • A binding settlement—unknown claims
  • A binding settlement—creating third party rights
  • A binding settlement—latent defects

This Practice Note considers the effect of the settlement with regard to general principles of contract interpretation and the implication of terms, as well as the admissibility of without prejudice communications when interpreting the effect of a settlement agreement, the scope of the settlement and issues as to unknown claims and effect on third party rights. For guidance on the effect of the settlement agreement on the litigation, see Practice Note: Settlement agreements—the effect on litigation.

The effect of a settlement agreement is that it will be binding on the parties in accordance with its terms and its scope. The scope of what is included in the agreement is an important part of the drafting (on which, see Practice Note: Settling disputes—drafting the settlement agreement). The terms of the settlement agreement should be express. There have been instances where in the face of ambiguity or absence, the court has been asked to interpret the agreement and provide a declaration of its meaning as a means of binding the parties. This may include an application to imply a term in order to discern the extent to which it is binding on the parties. When the application is made, it is appropriate to seek specific performance of the obligations within the agreement.

A binding settlement—the interpretation of a settlement agreement

When interpreting what