A settlement promise to finish work needs its own delivery plan
Assess non-cash work obligations proposed in a settlement, including scope, capacity and cost rather than focusing only on the cash figure.
Corporate Recovery Partners
01 / 06
The number may not describe the whole deal
At a settlement meeting, the other side proposes a lower cash amount if your business completes additional work. It can sound like an easier compromise than paying more. Before agreeing, identify exactly what performance is being promised. Labour, materials, access and completion conditions can create a substantial commitment beyond the figure discussed across the table.
Ask for the work, location, required outcome and proposed timing to be described clearly. Identify who provides access, information and any necessary approvals. If the scope is still uncertain, say so. Avoid agreeing to do whatever is needed without understanding how completion will be assessed or how further disagreement would be handled under the proposed arrangement.
Business.gov.au's contract guidance recommends clear work and timing terms. That discipline is useful when reviewing settlement performance obligations with your lawyer. Ensure the document reflects what the delivery team can actually do. A simple verbal description may conceal an open-ended obligation, so ask for unclear wording to be explained before making the commercial decision.
Imagine a hypothetical settlement reducing a cash payment by $4,000 in return for an agreed return visit. If the proposed work needs $2,000 of materials and significant crew time, the cash reduction is not the full economic benefit. The example does not decide whether the bargain is sensible; it shows why the work needs costing alongside the money.
Check whether the people, equipment and materials are available within the proposed period. Consider the impact on existing commitments. If approval from a supervisor or another director is needed, make that clear rather than assuming it will follow. Ask the lawyer to explain what happens if access is unavailable, completion is disputed or a promised step cannot occur as planned.
Read the complete proposed terms, including the connection between the work, payments and releases. Obtain appropriate advice before committing. Give the delivery team the final agreed scope and keep performance evidence afterwards. A settlement involving work is only useful when its obligations are understood and deliverable; reducing the cash figure alone does not establish that the business can carry out the deal.
