Civil Engineering Reference
In-Depth Information
CSL remained liable for defects and Ennis confirmed that £142,901.13 remained due for
payment within ten days.
Immediately after the agreement, Ennis notified CSL that the £142,901.13 would not be
paid in full, but that it would be withholding £7,362.88 for a damaged gas pipe. Ennis then
paid the balance. At this point, things became interesting. CSL argued that Ennis's failure
topaythefullamountmadetheagreementvoidandthatCSLwasentitledtoarevisedfinal
accountofover£1million.Ennispaidtheamountwithheldandthewholedisputeendedin
court.
The court made the following useful points:
•
A court will be reluctant to hold void for uncertainty (of no legal effect because un-
clear) an agreement which was intended to have legal effect.
The agreement was not void for uncertainty, because both parties intended it to have
legal effect and there was an implied term that payment would be made within a reas-
onable time.
The court rejected CSL'sargument that Ennis hadrepudiated the agreement byfailing
to pay the £7,362.88. It drew the distinction between a compromise agreement as to
value in return for a promise to pay and an agreement as to value in return for pay-
ment.Inthiscase,Ennishadsimplypromisedtopay,andafailuretopayentitledCSL
to sue for damages but left the agreement intact. If the agreement had been based on
payment by Ennis, CSL could have treated the failure as repudiation.
Generally speaking, a compromise agreement will discharge all claims and counter-
claims unless provision is especially made for their revival in the case of a breach.
Ennis did not repudiate, because they paid the major portion of the sum to CSL. In
withholding £7,362.88, Ennis were wrong. However, invoking a contract provision in
good faith but in error is not usually a repudiatory act.
CSL were bound by the agreement to £707,500.
•
•
•
•
•
Therefore, the answer to the question is that the employer cannot subsequently set-off
money once a financial settlement has been agreed. The actual judgment, which is relat-
ively short and can be downloaded from the website of the British and Irish Legal Inform-
ation Institute (
www.bailii.org
)
, repays careful reading. The parties obviously thought they
had covered all the eventualities but finished having to have the agreement sorted out in
court.
