Parties to a transaction agreement often agree to pay their own legal fees, but are there any specific costs that the parties should share? As the employment cases described above show, if the objective of a transaction agreement is to reach a complete and final settlement of the receivables, it is not necessarily easy to cover them all in an agreement. When reaching an agreement, there is not much to consider, especially based on the catch-all rule. However, the drafting of the waiver and release clause must be carefully considered to ensure that you do not compromise future claims that your company may have against an employee, or vice versa, if certain staff claims are to be deleted. The decision of the Khanty-Mansiysk Commercial Court Recoveries Limited v. Forsters LLP  EWHC 522 (Comm) may not be of obvious importance to HR practitioners at first glance. However, this decision highlights important considerations for the development of employment comparison agreements. The forsters clause was extremely broad and Forsters could, in the circumstances of his case, use it to cover this potential risk of negligence. Employers should view this decision as an important reminder of the need to take the time to verify whether the release and waiver provisions are properly formulated in a transaction agreement. The parties should carefully consider the rights they wish to release as part of a transaction agreement and whether the language in the transaction agreement specifically covers those rights. Authorizations can cover different categories of rights, including: resolving most disputes, so it is important that legal teams are aware of key issues related to the development of a transaction agreement. This is especially true now that companies around the world are facing the COVID 19 pandemic and the resulting pollution of supply chains and trade relationships. For example, the California Civil Code Section 1542 provides that a general disclosure of rights does not apply to claims, that the party to the exemption “does not know or presumes that it exists” at the time of publication, and that, if known, it would have had a “substantial” influence on the agreement. If your transaction agreement is governed by California law or has another connection to California, a provision that the parties agree to waive Section 1542 must be included in order to release unknown claims.
The Commercial Court found that, during the construction of the transaction contract, the debt was captured by its terms and that Forsters was released from all possible claims. “… in the full and final settlement of any claim or claim that the parties have or could have had against each other (whether they are present or at a given time or time in the future, and whether in the consideration of the parties…) ». When companies decide to resolve problems by mutual agreement, the settlement agreement should accurately reflect the compromise reached by the parties. Too often, the focus is only on the amount to be paid in exchange for the release of debts, but there are other equally important considerations that need to be addressed. Normally, the parties to a transaction agreement are the parties to the contracts in question or the parties to the pending litigation or arbitration. But should the agreement concern someone else? Consider whether you will benefit from a provision that companies with a legal relationship with the parties also accept the release of rights.