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They were not suggesting that a party could be induced by a statement if it was not in fact misled.
The authorities were clear that, while a party need not have had “blind faith” in the truth of a representation in order to establish reliance, it “must have given some credit to its truth, and been induced into making the contract by a perception that it was true rather than false”.
This may mean that employees are more likely to succeed in an argument of unequal bargaining power if they challenge the validity of settlement and COT3 agreements.
This is an interesting point that, sooner or later, will be run as a test case challenging the introduction of fees and the unreasonable delays in bringing a claim to the employment tribunal.
That does not constitute reliance in the relevant sense.
To the extent that earlier authorities have suggested that “influence” was sufficient to constitute reliance, they were simply confirming that the representation did not need to be the sole cause of entry into the contract.
Decision The Court of Appeal (Underhill, Briggs and King LJJ) overturned the County Court’s decision and ruled that the settlement agreement was binding, although it expressed some regret in doing so.
Key to the court’s reasoning was the conclusion that the insurer’s entry into the agreement had not been induced by the claimant’s statements in the relevant sense.
Briggs LJ noted that it is an everyday feature of litigation for parties to be “influenced” by their opponent’s factual pleadings in that sense when assessing whether to settle and at what level.Prior to trial a settlement was reached and the terms recorded in a settlement agreement.Two years later, the employee’s neighbours provided the insurer with further evidence indicating that the claim had been dishonestly exaggerated and that the claimant had in fact fully recovered from his injuries over a year prior to the settlement.It confirms that a fraudulently advanced case will not necessarily entitle a defendant to rescind a settlement agreement – particularly in cases where the evidence suggests that, at the time of settlement, the defendant had at least some indication of the possibility of fraud and therefore settled “with its eyes wide open”.The decision illustrates the courts’ “robust disinclination” to interfere with settlement agreements unless there are exceptional circumstances, given the important public interest in the finality of settlements.