Is an Unsigned Record of Settlement Enforceable?

Think a Record of Settlement isn’t binding until it’s signed? Think again. JPI v VFU [2025] NZERA 66 found that parties were bound by an unsigned agreement.

The Facts

JPI was employed by VFU. During the employment relationship a problem arose for which JPI had applied to the Authority for resolution.

VFU later informed the Authority that the matter had been settled. However, in response, JPI said that she “did not sign or agree to settlement”. The Authority adjourned the investigation meeting to determine whether the employment relationship problem had been settled.

The background to the alleged settlement was:

On Wednesday 14 August 2024 VFU’s representative sent a settlement offer to JPI’s representative, the offer expired on Thursday 15 August 2024 at 4pm;
On Friday 16 August JPI’s representative replied saying JPI would accept the offer if VFU also provided a positive reference;
On Friday afternoon VFU sent a proposed draft reference to JPI’s representative;
The representatives had phone calls and exchanged emails about agreed changes to the draft record of settlement; and
At 4:16pm on Friday 16 August VFU’s representative emailed JPI’s representative attaching the amended settlement agreement, JPI’s representative said they would arrange for JPI to sign the document.

JPI did not sign the agreement, VFU did not take steps to pay the compensation stipulated, and a mediator was not asked to sign the agreement. However, VFU argued that JPI’s employment relationship problem in the Authority must be treated as having been settled, “either by accord and satisfaction or by estoppel”.

The Legal Concepts

Accord and satisfaction is an expression used to describe an agreement between two parties to settle a legal proceeding claim by another means of consideration. The accord is the agreement to settle, and the satisfaction is the consideration which makes the agreement operative. Here the suggestion is that the accord was the alleged agreement to resolve the matter in the Authority by a Record of Settlement and the satisfaction would be payment of the compensation stipulated.

On the other hand, estoppel is the principle which precludes a person for asserting something contrary to what is implied by a previous statement or action by that person. Here estoppel would preclude JPI from saying there was no agreement to settle after JPI’s representative said they would arrange for signature for that agreement.

The Authority’s Finding

The Authority said:

At [15], the difficulty with treating the unsigned agreement as a binding agreement amounting to accord and satisfaction was that it expressly provided that it constituted an offer until signed.
At [17]-[20],
- To satisfy VFU’s estoppel argument VFU must show that JPI “created or encouraged a belief by her words; that the respondent reasonably relied on that belief to its detriment; and that it would be unconscionable for the applicant to depart from that belief”;
- JPI, through her representative, created and encouraged a belief by VFU that she had settled the employment relationship problem by stating that the compensation offered would be accepted if a positive reference was provided; outlined the details of the reference sought; and confirmed that signature would be arranged if the record of settlement was amended as discussed;
- In reliance, VFU amended the record of settlement as discussed and sent that to JPI’s representative;
- VFU relied on that belief to its detriment because, it incurred costs to finalise the record of settlement and reference, and the signed reference had been provided to JPI so she could use it. Any future proposal to settle could not include a positive reference (as that had already been provided), so additional compensation would be required. Therefore, VFU had a contingent liability for the compensation that was agreed;
- It would be unconscionable for JPI to resile from the representation that the employment relationship problem had been settled; the terms were agreed, clear and in writing, JPI’s signature was merely a formality. Allowing JPI to renege in those circumstances “could have a chilling effect on the parties’ ability to rely on representations made in settlement negotiations”.

Ultimately, the Authority found at [25] that JPI was estopped from denying that she had settled her employment relationship problem on the terms set out in the Record of Settlement.

Our Commentary

Parties, and their representatives, should be careful to express agreement to terms that they are not certain they, or their client, are willing to accept, otherwise they may find themselves estopped from reneging on that initial expression of agreement.