Drafting Enforceable Dispute Resolution Clauses: Part 2 - Real Life Examples

Case name	Main issue	Overview of the outcome
Abberley v Abberley [2019]	Whether ‘heads of terms*’ is binding contractual agreements	*’Heads of terms’ is a document that outlines the main terms of an agreement between parties in a commercial transaction.  The case was about resolving a dispute about a farm in Wales between two brothers. They wanted to resolve it through mediation. The mediator had to write down the initial terms on a piece of paper because a computer broke down and that piece of paper was signed at the end of the day. The next morning some new terms were added. The judgement said that there was in fact a binding contract because of the two factors. Firstly, the piece of paper was signed which indicates creating a contractual bond. Secondly, the terms made contractual sense to be a binding agreement for the brothers to resolve the dispute, even though the terms were merely ‘heads of terms’ and did not constitute the full, detailed contractual term.  This case shows that ‘heads of terms’ may be considered binding by courts and that in an instance of writing them down instead of full terms including all details, they should be worded carefully and include the pivotal points of the terms.
RTS Ltd v Molkerei Alois Muller Gmbh [2010]	Whether an expired agreement that is being acted upon constitutes a valid contract.	This case is a contract law case rather than mediation per se but it clearly demonstrates one of the requirements of contractual terms discussed above, that is the term, and the whole contract, having to make commercial sense. In this case, the terms of an agreement were executed despite the fact that the contract had expired. This means that if a term makes commercial, contractual sense it will be enforceable.  This highlights the need of all contractual terms to be well-worded and thought through before being enforced as they may stay in force beyond the contracted expiry date.
Seeney & Anr v Gleeson Developments Ltd & Anr (2015)	Whether the courts should allow parties to object to agreements that were approved by mediators (/arbitrators).	Two parties wanted to resolve a dispute through mediation. A settlement agreement was sent by the mediator to the court. One of the parties disputed them and claimed that they had not agreed to those terms. The judge held that the courts are reluctant to undo resolutions agreed through mediators and will be sceptical to overturn them months or years after their determination.  This case shows that when a dispute resolution is finalised and presented to court it will likely not be reverted, especially after months or years after being determined.

Conclusion

It is crucial that dispute resolution terms are clear, well-worded and carefully thought through. This increases the likelihood of the terms being enforceable and satisfactory for all parties. If, however, the terms are blurry, confusing, or too complicated then there is a risk that your dispute resolution clause may not be enforceable. 

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Author: Zofia Bonarowska -

Author: Zofia Bonarowska -

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DISCLAIMER

This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.

Sources

1) Abberley v Abberley [2019]

2) RTS Ltd v Molkerei Alois Muller Gmbh [2010]

3) Seeney & Anr v Gleeson Developments Ltd & Anr (2015)