Posted on: Feb 28, 2013

From time to time we come across a situation where one party to a settlement agreement fails to sign the agreement in writing, and/or tries to change the terms after an agreement has been reached.  When this happens, we’re often asked whether or not the verbal agreement is binding and enforceable.  Well in the case of Nand v Richmond NZ Trust Limited [2012] NZERA Auckland 384, the Authority Member examined this very situation.

The Authority addressed whether the parties had entered into a binding settlement. The main issue was whether the settlement agreement was required to be in writing and signed by both parties before it became binding.

The Authority, in considering whether it was it necessary that the agreement be in writing and signed by both parties, referred to case law and the law regarding what makes a binding and enforceable agreement. The Authority found that Ms Nand’s representative acted within the scope of his authority by reaching an agreement with the employer on a settlement, the terms of which were: derived from offers, the acceptance of which was communicated, were certain, were supported by consideration in that a sum of money would be paid, in return for which Ms Nand would not pursue her employment relationship problem, and were intended to create a legal relationship between the parties.

There was no term of the settlement requiring the execution of a written record of settlement before the settlement became binding. The Authority found the terms of the settlement were therefore final and binding, and that there were no grounds on which to set it aside. Ms Nand could not proceed with her employment relationship problem.




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