Commentary - Setting aside compromise agreements

Two recent cases have provided illustrations as to when compromise agreements can be declared invali...

Two recent cases have provided illustrations as to when compromise agreements can be declared invalid.

In Drinkall v Whitwood (2003), a minor suffered injuries in a road accident.

In April 2000, a Part 36 offer was made by her representative on an 80%/20% basis in her favour. This was accepted. In September 2001, the defendant withdrew from the settlement shortly before the minor's 18th birthday.

Proceedings were issued by the claimant, pleading that the agreement in August 2000 was binding on the issue of liability.

It was held there was no settlement as, at the time of the agreement, the claimant was a minor. There could not be a valid compromise agreement without court approval. It made no difference that the offer was made pursuant to Part 36 or that the offer was in relation to a partial settlement only. The defendant was entitled to renege on the agreement.

In Brennan v Bolt Burdon and others (2003), the claimant suffered carbon monoxide poisoning. She issued proceedings against her previous negligent legal representatives and the county council in June 2001, but service did not occur seemingly within the requisite four months of issue. The claimant, therefore, agreed to discontinue the proceedings with no costs orders. She then withdrew from the agreement following the decision in Anderton v Clwydd County Council (2001), which held that service of the claim form was valid in similar circumstances.

The council contended the claimant's claim had been compromised as there was a binding contractual compromise to discontinue. However, it was held there had been a mistake of law in relation to service, which was fundamental to the making of the compromise agreement and, therefore, the agreement was void.

The Drinkall decision highlights the necessity for a claimant to issue proceedings to enable an agreement to be approved by the court - even when there has only been a partial settlement. The defendant is legally entitled to resile before such approval.

The Brennan case demonstrates a mistake must be serious (such as a mistake of law) to invalidate an agreement between two consenting parties.

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