Crystal Palace FC (2000) Ltd. v Dowie

Whether negotiations create a binding contract depends on the whole course of dealings and whether the parties agreed the same terms. Words which appear tentative may constitute an offer when considered in their conversational and negotiating context, including earlier offers and the parties’ conduct. A settlement offer may include an unstated but clearly communicated requirement, such as agreement on confidentiality. If that requirement remains unresolved, the purported acceptance is ineffective. Alternatively, where the terms have not crystallised sufficiently, no offer capable of acceptance has been made.

The claimant and defendant were engaged in negotiations concerning the settlement of litigation arising from an earlier finding of fraudulent misrepresentation. The claimant’s solicitor sent a fax purporting to accept an offer of £350,000 plus the costs of the trial in full and final settlement.

The defendant denied that a binding agreement existed. The issues were whether the defendant’s solicitor had made an offer capable of acceptance, whether payment of the claimant’s costs formed part of the offer, and whether confidentiality was a necessary term of any settlement.

1. The claim was dismissed. No binding settlement had been concluded.
2. The court must examine the whole of the negotiations and decide whether, on the true interpretation of what occurred, the parties agreed upon the same terms. Contractual agreement arises only if that common agreement is established.
3. The words used on 10 September 2007, considered in their immediate context and against the previous negotiations, amounted to an offer capable of acceptance. Although the words might have been uncertain in isolation, the defendant had previously made offers of £220,000 and £350,000, and the later statement was properly understood as a renewal of the £350,000 offer in respect of damages.
4. The negotiations also proceeded on the basis that the defendant would pay the claimant’s costs in accordance with the earlier costs orders. The £350,000 offer therefore carried the previously accepted term concerning those costs.
5. Confidentiality was, however, a necessary part of any settlement. The defendant’s solicitor’s attendance notes showed that no settlement could be achieved without agreement on some form of confidentiality provision. The claimant’s solicitor understood that requirement but did not accept it.
6. Accordingly, the claimant’s fax did not accept the offer that had been made. Alternatively, if the confidentiality discussions had not crystallised into a defined contractual requirement, the parties remained in negotiations and no sufficiently certain offer had been formulated.
7. The question whether the parties also needed to agree the formal method of disposing of the proceedings was hypothetical and did not require determination.

The judgment records that Tugendhat J had previously determined preliminary issues in the same litigation, finding fraudulent misrepresentation but refusing rescission of the compromise agreement. The present judgment determined whether subsequent settlement negotiations created a binding agreement.