Is a compromise agreement fail-safe? Can things still go wrong?
Though it is really very rare, occasionally a problem can crop up so you do need be sure of your facts and take care when choosing your professional adviser.
Here's an interesting example from the sports world. Take one football club, a relationship that turned sour and the small matter of ?1 million...
Was The Manager Off-side?
Even if employer and employee agree, and a solicitor ratifies the deal as a formal Compromise Agreement there will be times when either the former employee or the boss has second thoughts.
The formalities of the Agreement mean the terms are very seldom disputed once signed, but they certainly were in the case of Crystal Palace Football Club and their former manager, Ian Dowie.
Relations between Ian Dowie and the club's owner, Simon Jordan had been stormy for months and the arguments continued even after Dowie left before the end of his contract "to spend more time with his family".
Ian Dowie's contract had contained a clause saying Crystal Palace would be due ?1,000,000 if he left to join another club.
A compromise agreement was worked out and this allowed him to leave in order to spend more time with his family in Bolton.
But within a few weeks he turned up again in south London, as manager of Palace's arch-rivals Charlton Athletic a few miles away.
That was enough for Palace's owner, Simon Jordan to ask the High Court to release him (Simon Jordan) from the Compromise Agreement, which the judge did as soon as he was convinced that Ian Dowie had been less than honest about his intentions.
So how did the story end?
It isn't likely Crystal Palace ever got their ?1,000,000 compensation since Ian Dowie was fired by Charlton within a few months of joining them. But the club had its day in court and did its best to make life hard for its former employee.
So is a Compromise Agreement fail-safe? The fact is that like all other contracts, a compromise agreement is not immune from challenge where fraudulent dealings are alleged. Ultimately, like all contacts, they will only succeed if the business fundamentals are logical and the parties are clear about their intentions. Their overwhelming advantage is that they remove the uncertainty from a host of possible statutory claims, which must be good news for employer and employee alike.
For further information or help with drafting or concluding a Compromise Agreement please call us on 020 7274 0110 or write to guy.thompson@guyt.co.uk