Did You Unintentionally Just Settle? A Cautionary Reminder To Be Objectively Clear In Your Negotiations

The Federal Court recently found that parties to a patent infringement action settled the litigation, and enforced an agreement, despite an ongoing dispute between them as to the terms of settlement.  Justice Brown's decision in Betser-Zilevitch v Nexen Inc et al, 2018 FC 735, is a good reminder that parties may reach a settlement informally and unexpectedly. The key message is that if a party does not want to be bound unless and until it agrees to all terms that it subjectively considers to be essential to a deal, then it must make that objectively clear in every settlement communication.

The Court may impose a settlement where: (a) objectively, the parties mutually intended to create legal relations, (b) there was consideration flowing in return for a promise, (c) objectively, the terms of agreement were sufficiently certain, and (d) there is a matching offer and acceptance on all terms essential to the agreement.