Out of court settlement

Out of court settlement is the nature of the contract, the substance of which is determined by Article 917 k.c. 1 of its elements is to make concessions by the parties to each another in order to remove the uncertainty about the claims arising from that relation or to guarantee that they are implemented either to avert the dispute existing or likely to arise (Article 917 kc).

An out-of-court settlement can happen e.g. waiver of the claim.

What's the difference between a court settlement and an extrajudicial settlement?

Unlike court settlement out-of-court settlement is not an execution title. It has only consequences resulting from the fact “reconciled” (res transacta). Force the debtor to comply with it can only happen by Investigation legal claims. The main question will be to search a benefit or to justice the amount resulting from a circumstantial civilian relationship.

Provisions applicable to out-of-court settlement

All provisions concerning legal acts shall apply to the settlement. Unlike court settlement (Articles 10 k.p.c., 184 et seq. k.p.c., 223 k.p.c. and 777 k.p.c.) an out-of-court settlement is not an enforcement title. However, it has effects due to the fact that “res transacta”.

Exceptional settlement concessions of the parties

It should be stressed that concessions are made by the parties as regards their existing legal relationship. The out-of-court settlement so concerns the legal relation between the parties, with issues relating to the individual claims covered by the agreement being settled within that relationship.

It should be assumed that The out-of-court settlement shall be the subject of all claims arising from a given legal relationship – the 1 that was covered by the settlement (yes: ultimate Court judgement of 26 June 2008, act No. II CSK 98/08, not publ.).

In his statements, he stressed that the ultimate Court was qualified as a legal act as a settlement, “the parties do not decide which concessions they make to each another in terms of the existing legal relation between them, referring to the actual nonsubjective content of that relationship, but the concessions which the parties make to each another in comparison with their knowing of the content of the legal relation and of the kind and the degree of the claims arising therefrom.

In another words, in the case of an out-of-court settlement mutual concessions request not be equivalent Or, objectively equal. Therefore, even specified an agreement will have binding effect and effectiveness, in which there are far-reaching differences in the equivalence of concessions (such as: judgments of the ultimate Court of 26 June 2008, II CSK 98/08; 12 April 2018, II CSK 375/17).

Judicial settlement – explanation of content

The settlement, as a legal act consisting of statements of intent of both parties, can and should be examined by the prism of Article 65 of the Code, and in peculiar its § 2 (such as the ultimate Court in its judgement of 29 May 2015, V CSK 446/14). The intent of the regulation contained in Article 65(2) is to decode the actual intent of the parties, regardless of the wording contained in the contract.

The importance of a declaration of will should be determined on the basis of the circumstances of its submission, the principles of social coexistence and the practices adopted. Contracts should search to find the joint intent of the parties and the intent of the agreement, not limited to literal explanation (Article 65 kc).

This means that in utmost cases, there may be a situation in which the content of the contract found as a consequence of explanation will be in contradiction with its express wording (yes: judgement of the ultimate Court of 28 November 2003, IV CK 206/02 and the caselaw cited therein).

In addition, it requires that the presumption of the rationality of the legislature, as well as the justification for the draft Code of Obligations, indicate that the criterion of the intent of the contract is of importance to the parties' consent. This is expressed primarily in that purpose of the agreement it does not request to be ‘compliant’ (the criterion of the common nonsubjective would be absorbed by a consistent intention), but it is adequate that it will be covered by the parties' awareness.

Contractual loyalty requires parties to refrain from acting, including the proposal of contractual provisions which would seriously jeopardise the anticipation of achieving this nonsubjective (yes: R. Trzaskowski [in:] civilian code. Comment. Volume I. General section, Part 2 (Articles 56–125), ed. J. Gudowski, Warsaw 2021, Art. 65.).

What can an out-of-court settlement involve?

It should be noted that the settlement may besides concern a dispute over the existence of a legal relation (here for an undue benefit). The agreement may include concessions, specified as the granting of a legal relation and recognition of debt and consent to payment of claims under certain conditions (which has lifted uncertainty about the claims resulting from that relationship) and instalment and deferred repayment (yes: Court of Appeal in Lublin, 1st civilian Division in judgement of 25 March 2021, No. I AG 121/20 ).

What kind of legal relation can an out-of-court settlement involve?

The subject of the settlement may be any legal relationship:

• mandatory
• physical
• family
• inheritance

which has not been completely deactivated at the disposal of the parties.

The out-of-court settlement so serves to form legal relations regardless of the source. It may concern relations with:

• contracts
• illegal acts
• unwarranted enrichment
• other sources

Effects of an out-of-court settlement

Although the court is not bound by an out-of-court settlement, it creates a fresh factual and legal state of affairs, which must necessarily affect the judicial decision. This is due to the fact that the conclusion of an out-of-court settlement creates a state called "the seriousness of the reconciled thing“ and its implementation leads to the termination of the legal relation (e.g. waiver) to which the settlement has been concluded.

The seriousness of the matter, as opposed to the seriousness of the substance judged, does not constitute grounds for rejecting the action, but results in its rejection, provided that the opposing organization submits an appropriate plea of substance in this respect (yes: Regional Court in Łódź in judgement of 10 September 2020 No. III Ca 1334/19).

From the point of view, it cannot escape that the party's conclusion in the settlement of a message that waive any further claims (or an equivalent message that a given amount in its entirety satisfies its claims) resulting from a circumstantial legal event, not only makes it possible for the another organization to raise, in the context of a dispute over specified a claim, a plea in law, but besides under conditions of effectiveness waiver of the claim, the failure of the entity’s right to prosecute this claim in the future (yes: judgement of the Court of Appeal in Krakow of 25 May 2017, I ACa 1691/16, Legalis No 1728571).

Binding nature of the out-of-court settlement

An out-of-court settlement is primarily a contract. It is the rule that an out-of-court settlement concluded by the parties to a civil-law relation binds the parties, subject, as the case may be, to the admissibility of the withdrawal from its legal effects (yes: Court of Appeal in Szczecin in judgement of 21 February 2013, I ACa 794/12, Lex No 1344212).

Failure to make a court settlement

An out-of-court settlement is an agreement that creates binding relationships. Its implementation is subject to the general provisions governing the execution of commitments. Failure to make a settlement or its improper execution does not render it invalid and return to its position prior to its conclusion.

Failure to make a settlement gives emergence to liability based on Article 471 k.c. It is simply a rule that an out-of-court settlement concluded by the parties to a civilian law relation binds the parties, subject, as the circumstances may be, to the admissibility of evasion from its legal effects (Articles 918, 82-83, 87 k.c.).

Non-execution of the settlement by the debtor within the specified time limit

It should be stressed that the default by the debtor of the settlement within the time limit or time limits specified therein, it does not consequence in the failure of its existence and effects by way of a legal act of the creditor (a deviation from the out-of-court settlement). Failure to make a settlement does not render it invalid even in the light of the principles of social coexistence (Article 58(2) k.c.).

Therefore, since the agreement as a contract binds the parties, the creditor is entitled to a contract in the event of its default within the reserved period. claim for settlement according to its content (e.g. the ultimate Court resolution of 18 December 1985 III CZP 6485, Lex No. 3194)

Provisions of the out-of-court settlement:

Out-of-court settlement and revocation

The withdrawal of the application shall not be a legal act and the declaration of revocation shall not be a declaration of will referred to in Articles 60 and 64. Withdrawal is simply a procedural act. This is the decision of the parties to the trial, subject to review by the court (Article 203 §4 of the General Court). In the event of opposition of the court, the application shall not be effectively revoked and any action taken, even outside the court, in order to avoid the effects of specified opposition shall be void (Article 203(4), second sentence).

Implementation of an work to revoke a suit contained in an out-of-court settlement cannot so be conducted as if it were commitment to declare the will of the individual carrying out the legal act. A court ruling may not replace a message of procedural action in another case. A request under Article 64 k.c. is inadmissible for a court to issue a decision declaring the individual afraid to lodge a procedural message against another case (yes: judgement of 30 October 1996, I PRN 97/96, OSNAPiUS 1997 No 6, item 95).

Settlement and distribution of the payment

As is claimed in the judicature, the modification of the debtor's work to postpone the payment of the cash and to distribute it in instalments does not argue the jurisdiction of the relationship, the law or the principles of social coexistence (so the ultimate Court, in its judgement of 16 February 2005, IV CK 502/04 Lex No 177277).

Distribution of debt into instalments may so be the subject of an out-of-court settlement.

Out-of-court settlement and limitation waiver

The case law emphasises that only then can a declaration of the debtor's will be accepted waiving the limitation charge, where his intention to waive the limitation of time is evident from the accompanying message of circumstances. specified circumstances are e.g. the debtor’s and the creditor’s dealings with distribution of the debt into instalments, conclusion of a fresh contract, conclusion of a court or extrajudicial settlement (yes: ultimate Court in judgement of 21 July 2004, V CK 620/03, Lex No 137673).

Renunciation of a claim in an extrajudicial settlement

The waiver of the claim under the settlement is simply a declaration of will that the plaintiff resigns from the claim and entitles the suspect to complain that the claimant's claim to the degree that it has been waived, i.e. no longer exists (so: ultimate Court judgement of 12 April 2018, II CSK 375/17, LEX No 2490618).

However, this does not mean that a organization may be required to make an effective declaration on the date of the settlement of any claims relating to a peculiar legal relation (e.g. compensation related to a communication accident), including those not covered by its awareness.

In this context Court of Appeal in Szczecin in judgement of 3 November 2021 of Act I ACa 283/21 He pointed out that the insurer, and so a professional entity, engaged in the insurance business, should formulate its provisions in specified a way that they are clear and understandable to the another organization to the contract. Since the settlement is intended to destruct a certain degree of legal uncertainty between the parties, the insurer cannot pass on to the contractors the burden of ‘perception’ of its intention. This requires, for example, the loyalty of the insurance entrepreneur, to whom he is responsible.

Renunciation of part of the claim

If the parties wanted to exclude any claims or, in another words, to settle only any of the claims resulting from this relationship, they should express specified a will in the content of the settlement, since the rule is that the settlement concerns the full legal relationship, that is, all its elements, not only individual claims.

Out-of-court settlement and future claims

There is no obstacle to the settlement to cover conditional claims as well as future claims. The statute of limitations can, of course, besides be the subject of a settlement, and the consequence is – the restoration of the appeal. The settlement thus, implicitly, includes a waiver of the limitation period (yes: Court of Appeal in Lublin, 1st civilian Division in judgement of 25 March 2021, No. I AG 121/20 ).

Non-judicial agreement and change in the nature of the claim

The Parties may, in a settlement, transform the legal nature of the existing legal relation with the effects of renewal (renewal) — Article 506(1) k.c. This is erstwhile the debtor is to execute another benefit, or even the same benefit, but on another legal basis.

The renewal shall have effect from the date of its completion (ex nunc). If the parties have concluded an out-of-court agreement covering innovation the condition or time limit, the effect of renewal shall be met by the date of fulfilment of the condition or date of arrival (yes: Decision of the ultimate Court of 21 November 2019 No. II PZ 18/19).

Convincing an out-of-court settlement:

Procedure for contesting an out-of-court settlement

Pursuant to Article 88(1) k.c., a waiver from the legal effects of a declaration of will which has been made to another individual under the influence of an mistake or threat shall be made by a declaration made to that individual in writing. It follows from the above that a letter containing a message of intent to abscond must so be served on the individual to whom it is headed and shall become effective erstwhile it has been so obtained that it may have read the contents of the letter (Article 61).

Non-execution of an out-of-court settlement Whereas, at the same time, repealing its legal effects pursuant to Articles 82 to 83 k.c. and 87 k.c. may lead to a "deupdate" of specified a settlement; whereas, in the event of a dispute on this matter, the court shall decide.

Dealing under threat

A message of will made to another individual under the influence of an mistake or threat is subject to a punishment of comparative nullity and to an effective appeal for the possible nullity of a declaration of will, made under the influence of an mistake or threat, must be made to the another organization (in writing) of the withdrawal from the legal effects of his message within 1 year of the uncovering of the error, and in the event of a threat within 1 year of the cessation of his or her concerns (Articles 87 and 88(1) and (2)).

On the another hand, a legal act containing a defective declaration of will is valid until its effects have been waived; on effective repeal of specified effects, a legal act is invalid (ex tunc), i.e. from the minute of the submission of a defective declaration of will (so: Wolter, civilian Law 1986, pp. 335–336).

Out-of-court settlement and non-compliance

In the area of legal relations, in peculiar where there is simply a strong desire to maximise the protection of the will autonomy of the performer, and to undermine the validity of legal action on the basis of evaluation criteria based on the principles of social coexistence, it is limited to exceptional cases.

In the case of an out-of-court settlement, specified an exceptional case cannot be seen. The inequivalence of benefits, even if it were demonstrated, cannot constitute the conditions for designation of a settlement with an invalid pursuant to Article 58(2) (yes: judgement of the Bialystok Court of Appeal of 22 October 2015, I ACa 518/15, LEX 1842181).

Out-of-court settlementFinding evidence after it was concluded

The legal effects of the settlement cannot be waived due to the uncovering of evidence of claims to which the out-of-court settlement relates, unless it is concluded in bad religion (Art. 918 §2 kc).

Article 918 §2 k.c. treats separately the situation in which, at the time of the settlement, the parties were not known evidence of claims under its object. Their subsequent uncovering creates an chance to evade the legal effects of the message made only if 1 organization has withheld specified evidence from the another (yes: The territory Court of Dzerżoniów in its judgement of 5 May 2017.).

By the concept of ,,actual state’ – within the meaning of Article 918 §1 kc – all legal events determining the origin and existence and determining the content and scope of the legal relation to which the agreement relates (such as L. Stecki, in: Winiarz, Commentary, 1989, Vol. II, p. 826).