Negotiation hint: If something is important to you, ask about it!
Brian Wilson’s employment was terminated. He sued his former employer, claiming certain benefits, including a bonus that would otherwise have been due to him.
The parties attended a mediation. Both Mr. Wilson and his former employer were represented by counsel. It appeared that the parties reached a settlement. Both sides signed a settlement agreement prepared by Mr. Wilson’s counsel.
The problem? Shortly afterward, the employer found out that Mr. Wilson, in apparent breach of a non-competition provision in his employment contract, had taken a job with a competitor. The former employer sought a court order declaring that there was no settlement or, alternatively, that the enforceability of the settlement be determined at trial.
A judge of the Ontario Superior Court, applying summary judgment principles, found that the parties had intended to enter into a legally binding agreement, that there was agreement on all essential terms, and that the agreement ought to be enforced.
The judge dismissed the notion that the agreement ought to be set aside because Mr. Wilson didn’t disclose that he was working for a competitor. There was no contractual obligation upon him to provide his former employer with information about his post-employment activities. Nor was there any condition in the settlement that required that Mr. Wilson confirm that he wasn’t working for a competitor.
The judge pointed out that the alleged breach of the non-competition provision in Mr. Wilson’s employment contract was immaterial to his entitlement to a bonus earned prior to his termination and furthermore, that there was nothing in the settlement agreement that would prevent his former employer from pursuing that issue in court.
It may be that the former employer would not have entered into the settlement agreement if it had been aware that Mr. Wilson was now working for a competitor. If so, it should have made compliance with the non-competition clause a condition of the settlement.
This case should serve as a reminder to all involved in settlement negotiations to remember a cardinal rule: If something is important to you, say so, make it a condition of the deal, or at least make certain to ask about it.