Breach of Settlement Agreement Clause
While there was no evidence before the arbitrator of any damage globe and Mail had suffered as a result of Wong`s breach, the arbitrator noted the difficulty associated with quantifying damages resulting from the disclosure of information that should remain confidential, stating that such damages were “intangible and not easy or easily quantifiable.” The Court recognized that while the lump sum at issue was likely to be disproportionate to an actual loss suffered by The Globe and Mail, it was not unscrupulous for The Globe and Mail to recover the money. The Court cited the test in Birch v. Union of Taxation Employees, local 70030 (2008), 93 O.R. (3d) 1 (C.A.) to prove that a revocation provision is unscrupulous. This test involves a two-part analysis – “a conclusion of unequal bargaining power and a conclusion that the terms of an agreement contain a high degree of injustice.” Coinciding with, or perhaps a major cause, the industry adopted the provisions on lump sum damages was the displacement of courts across the country from the favor of such clauses to acceptance (within borders) as an appropriate exercise of contractual rights. While there are some differences between states, courts have generally recognized that lump-sum damages clauses are a viable alternative to proof of actual loss as long as (i) the actual losses are difficult to quantify and (ii) the amount set is proportional to the loss expected at the time of the conclusion of the contract. See e.B. Restatement (second) of contracts § 356. Conversely, a clause that punishes the injured party instead of serving as an estimate of the likely loss is likely to be held to be unenforceable. The majority of cases are settled amicably.
It is possible to reach an amicable settlement. There is uncertainty about what will happen in the courts, the costs of the court and the lengthy proceedings. One of the benefits of an out-of-court settlement is that the parties have control over their privacy and do not have to share information about the settlement with the public, including the terms of the settlement. Applying the test to Wong`s circumstances, there was no evidence of unequal bargaining power. She was represented by counsel throughout her complaint and resolution process, and the settlement agreement was the subject of extensive round-trip negotiations. Nor is there evidence of a high degree of injustice inherent in the repayment reserve. Confidentiality was the only thing The Globe and Mail wanted from the settlement agreement, and the reimbursement of the lump sum was the mechanism to be used to enforce the requirement. The Court concluded that “this was a perfectly reasonable enforcement mechanism” because if Wong failed to comply with its primary obligation under the agreement, The Globe and Mail would be released from its primary obligation.
Another issue is determining who is “bound” by a confidentiality clause. Settlement agreements are usually signed only by the parties to the dispute. Nevertheless, if the agreement defines a “party” that includes agents and representatives, this could be interpreted as creating binding obligations for the party`s lawyers. Therefore, even if a lawyer is not a direct party to the settlement agreement, he or she may be bound by the confidentiality provisions as the client`s representative, in addition to the lawyer`s general obligation to maintain the client`s trust in accordance with ethical rules. In response to the #MeToo movement, a number of states have passed laws to prohibit employers from using non-disclosure provisions in settlement agreements that clarify allegations of sexual harassment, discrimination and other forms of harassment. These changes are indicative of how public policy can affect the law. In addition, these developments highlight the importance of staying informed about changes in standards and laws that may influence the structuring of comparisons (and sometimes the final decision whether or not to settle claims). The settlement agreement reached in Smelkinson Sysco v. Harrell, 162 Md.App. Section 437 (2005) provides a model for an enforceable indemnification provision. In this case, a former employee has agreed not to denigrate his former employer and not to help third parties to take legal action against the company. Importantly, he agreed that if the company violated the provision, he was entitled to damages for the breach, including but not limited to the amount he had received to settle his claims.
He further agreed that such non-exclusive damages “do not constitute a penalty, but are fair and proportionate in view of the difficulty of proving the harm caused to his former employer in the event of an infringement”. If confidentiality is a fundamental concern for you as an employer, you can consider the following in the settlement agreement: Terminating a settlement agreement is a complex matter and may require the assistance of a lawyer. A qualified lawyer can review the settlement agreement and determine what options exist under contract law. They can also provide advice and feedback on alternative options. The agreement contained the following confidentiality clause: The key issue for the High Court to consider was whether the confidentiality clause was as follows: Eliminate inequalities in bargaining power at the time of conclusion of the settlement agreement. If your employee is not represented by a union, you should consider a way (and perhaps even a payment) for the employer to seek independent legal counsel. “The parties will keep the facts and terms of this Agreement strictly confidential and will not disclose them to any other person or entity, except as provided in this clause or required by law, or to any regulatory authority or professional advisor, provided that they maintain the same level of confidentiality.” Finally, the U.S. Court of Appeals for the Eleventh District ruled against Kinwong Elec earlier this year in Circuitronix, LLC. (Hong Kong) Co., under Florida law, a provision of the settlement agreement establishing $2 million liability for each breach of an agreement was found to be punitive and unenforceable.
993 F.3d 1299 (11 Cir. 2021). The court found that the $2 million far exceeded the actual damages that could have been expected for a single violation, which would likely be less than $10,000. Less than 3% of civil cases result in a court decision. While some cases are dismissed by the court or a party, the majority of civil cases are settled by mutual agreement between the parties. .
- On January 30, 2022
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