Compromise Agreement Between Two Parties for the United Kingdom

Compromise Agreement Between Two Parties Template for England and Wales

A Compromise Agreement is a legally binding contract governed by the laws of England and Wales, used to resolve disputes between two parties without proceeding to litigation. It typically includes terms of settlement, financial arrangements, confidentiality provisions, and mutual releases of claims. The agreement must comply with specific statutory requirements, particularly when settling employment-related matters, and usually requires independent legal advice to be valid.

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What is a Compromise Agreement Between Two Parties?

The Compromise Agreement Between Two Parties is a formal settlement document used in England and Wales when parties wish to resolve their differences without recourse to litigation. It provides a structured framework for settling disputes, whether commercial, employment-related, or otherwise, and typically includes detailed terms of settlement, financial arrangements, and mutual obligations. The agreement must comply with specific statutory requirements and is commonly used in situations where parties seek a clean break while managing legal and reputational risks.

What sections should be included in a Compromise Agreement Between Two Parties?

1. Parties: Identification and details of the contracting parties

2. Background: Context and circumstances leading to the agreement

3. Definitions: Key terms used throughout the agreement

4. Settlement Terms: Core compromises and settlement provisions

5. Payment Terms: Details of any financial settlement

6. Warranties: Representations and warranties by both parties

7. Confidentiality: Obligations regarding confidentiality of the agreement

8. Governing Law: Applicable law and jurisdiction

What sections are optional to include in a Compromise Agreement Between Two Parties?

1. Non-Disparagement: Mutual obligations not to make derogatory statements about each other

2. Return of Property: Provisions for returning company property and confidential information

3. Post-Settlement Obligations: Ongoing obligations after settlement including restrictions and future conduct

4. Tax Indemnity: Tax-related protections and indemnities for settlement payments

What schedules should be included in a Compromise Agreement Between Two Parties?

1. Schedule of Claims: Comprehensive list of claims being settled under the agreement

2. Payment Schedule: Detailed breakdown of settlement payments and payment timing

3. Adviser's Certificate: Independent legal adviser's confirmation of advice given

4. Form of Announcement: Agreed form of any public statements or communications about the settlement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Cost

Free to use
Clauses
Industries

Employment Rights Act 1996: Primary legislation governing employment rights, including statutory requirements for valid settlement agreements, requirements for waiving employment claims, and protection of employee rights. Section 203 specifically deals with the validity requirements of settlement agreements including mandatory independent legal advice.

Equality Act 2010: Legislation protecting against discrimination based on protected characteristics. Critical for settlement agreements as it governs how discrimination claims can be validly waived and what protections must be included.

Companies Act 2006: Relevant when parties are companies rather than individuals, particularly regarding authority to enter into agreements and corporate capacity to contract.

Contracts Act 1999: Sets out fundamental principles of contract formation including offer, acceptance, consideration, and intention to create legal relations.

Limitation Act 1980: Establishes time limits for bringing different types of claims, which is crucial for determining what claims can be validly waived in a settlement agreement.

Civil Procedure Rules: Rules governing civil litigation in England and Wales, particularly relevant for settling ongoing litigation and the application of 'without prejudice' principles.

Protection from Harassment Act 1997: Legislation dealing with harassment claims, which may need to be addressed in settlement agreements where harassment allegations are involved.

Data Protection Act 2018/UK GDPR: Legislation governing the processing and protection of personal data, relevant for confidentiality clauses and data handling provisions in settlement agreements.

ACAS Code of Practice: Provides practical guidance on settlement agreements and good practice in handling employment disputes, though not strictly legislation.

Tax Legislation: Various tax laws affecting how settlement payments are treated for tax purposes, including Income Tax Act and provisions regarding tax-free settlement payments.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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