Reviewing a settlement or compromise offer from a supplier

A supplier's settlement offer arrives in a letter or an email with the words 'full and final settlement' in it, and accepting it ends the dispute on the supplier's terms: every claim the customer has, known or not, released for the sum offered, sometimes before the sum is paid. A settlement is a contract, and it binds the customer whatever it later discovers about the goods or the service. I review the offer from the customer's side and return it marked up with a written explanation of what it releases, what it should say instead, and what to keep open, for a fixed fee of £495 in three working days.

Who this is for

Businesses in England and Wales in a dispute with a supplier, contractor or service provider over defective goods, unfinished work, a failed system, an overcharge or a disputed invoice, that have received an offer to settle and want to know what accepting it means before they reply. The customer and the supplier are businesses; where the customer is a consumer, the statutory rights the settlement would waive are the starting point.

What to look for in a settlement offer

What the offer releases, and whether that is more than the dispute

A settlement releases claims, and the release clause decides which: the invoice in dispute, the defects complained of, or every claim the customer has or might have against the supplier and its group arising from the contract or the relationship. The review identifies the claims the customer knows about, the claims that may emerge (latent defects, consequential losses not yet quantified, claims by the customer's own customers), and asks for the release to be limited to the identified dispute, with unknown claims and claims for fraud excluded, and the limitation period under section 5 of the Limitation Act 1980 for the excluded claims preserved.

Without prejudice, and what the offer is worth as evidence

An offer marked without prejudice, made in a genuine attempt to settle, cannot be shown to the court if the dispute continues, and an offer made under Part 36 of the Civil Procedure Rules 1998 carries costs consequences if it is refused and not beaten at trial. The review checks whether the supplier's offer is a Part 36 offer with those consequences, whether the customer's own correspondence has been marked without prejudice, and whether admissions the supplier has made in open correspondence can be used if the settlement fails.

Full and final settlement, and the cheque you should not bank

A payment sent 'in full and final settlement' and banked can be treated as acceptance of the supplier's terms, so the review advises on what to do with a payment that arrives with those words attached. The settlement itself should be a written agreement rather than an exchange of letters, stating the sum, the date of payment, the claims released, the parties bound, and that the release takes effect only on receipt of cleared funds, so that a supplier that does not pay has settled nothing.

Payment, security, interest and the invoice

Where the settlement involves the supplier repaying, crediting or reducing an invoice, the review checks the payment date, the consequences of late payment, whether a director's guarantee or a retention of goods secures it, and the treatment of interest, which the customer can claim on a commercial debt under the Late Payment of Commercial Debts (Interest) Act 1998 and may be giving up. Where the customer is paying the supplier a reduced sum, the review asks for the supplier to confirm that no further sum is due and to withdraw any claim, statutory demand or winding-up threat.

Confidentiality, non-disparagement and the customer's own customers

Suppliers ask for confidentiality and non-disparagement, and the review checks that the customer may still tell its insurers, advisers and auditors, may comply with legal obligations, and may tell its own customers what they need to know about the defective goods or service, since a customer that has passed the supplier's defect on to its own customers cannot keep it confidential from them. It also checks that the supplier gives matching undertakings.

Remedial work, replacement and the position if it fails again

Where the settlement is a promise to re-do the work, replace the goods or fix the system rather than a payment, the review asks for a specification, a completion date, an acceptance test and a warranty period for the remedial work, with the customer's claims revived if the work fails. The implied terms of quality and fitness in section 14 of the Sale of Goods Act 1979 for replacement goods and of reasonable care and skill in section 13 of the Supply of Goods and Services Act 1982 for the remedial service apply to the new performance, and the settlement should not exclude them.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The supplier sent a cheque marked full and final settlement. Should we bank it?

Not before deciding whether you accept its terms, because banking the payment can be treated as acceptance. The review advises on returning it, holding it, or banking it with a written rejection of the condition, depending on the correspondence and what the supplier has said.

The offer settles everything under the contract. We have only complained about one delivery. Does that matter?

It matters if other claims exist or may emerge, because a general release covers them. The review identifies the claims you have, the claims that may appear later, and limits the release to the dispute in hand, with unknown claims and fraud excluded.

The supplier wants confidentiality. Can we still tell our customers?

Only if the agreement lets you, and the review asks for carve-outs: your insurers, advisers and auditors, your legal obligations, and what your own customers need to know about goods or services you supplied to them. Confidentiality should also bind the supplier.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a deposit and cancellation policy you have been sent
• Reviewing a purchase order with terms on the back

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.