A recent case (Newbury v Sun Microsystems [2013] EWHC 2180) is a reminder about how careful you need to be when making an offer to settle a claim.

In this case, both parties were represented.  The solicitors for Sun Microsystems (“Sun”) sent a letter offering to pay a sum of money by a certain date to Mr Newbury. The letter stated “such settlement to be recorded in a suitably worded agreement”. The offer was accepted by Mr Newbury.

Later, when the parties were trying to agree the wording of the agreement, Sun tried to change the date for payment, to address tax and national insurance issues and to include a confidentiality clause in the agreement. Sun tried to argue that they could do this because the offer letter had stated that the terms were to be recorded in “a suitably worded agreement”. 

Mr Newbury objected saying effectively that the letter contained an offer and he had accepted that offer. The court agreed with him. It went on to say that the position might have been different if the offer letter had  been stated to be “subject to contract”.

So, always include all your settlement terms in any offer you make. Heading the offer “subject to contract” can help you to subsequently negotiate terms but the downside is that the certainty of a clear settlement is lost.