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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Evora Ltd and Farrow SA agreed to conciliation under their contract. The conciliator proposed terms, and both parties signed a settlement agreement. Later Farrow SA refuses to comply. What is the legal position?

Evora Ltd can sue for breach of contract. Although conciliation is non-binding until agreement, a signed settlement is itself a binding contract, so Farrow SA's refusal to comply is a breach enforceable through the courts without restarting conciliation.

  1. AThe settlement is a contract, so Evora Ltd can sue for breach of itCorrect
  2. BThe settlement is unenforceable because conciliation outcomes are never binding
  3. CEvora Ltd must restart conciliation before any claim

Explanation

Conciliation itself is non-binding, but once the parties sign a settlement agreement it takes effect as a contract. Failure to perform is a breach that can be pursued in the courts. Nothing requires a repeat of conciliation.

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