5th January 2022
A happy new year to all the readers of this law and policy blog, and welcome back.
Today’s post is about civil law – that is the law which (broadly) deals with the legal obligations we owe to each other, as opposed to criminal law which (broadly) deals with the obligations we have to the state.
In essence: in civil law you can sue or be sued, and in criminal law you can be prosecuted or not prosecuted.
Civil law – especially contract law – is fascinating, and this post takes a topical legal agreement as the basis for explaining about civil law generally and contract law in particular.
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The topical legal agreement is the recently disclosed settlement agreement between Virginia Giuffre and the now dead Jeffrey Epstein, on which (Prince) Andrew is currently seeking to rely in American litigation.
I have chosen this as a topic because it is rare for the substance of any legal agreement to be newsworthy – and legal commentators have to take our examples as we find them.
I have no view on the underlying litigation as I do not know the facts – and I have no particular view on Andrew other than a general preference for republican government and a disdain for inherited titles.
My sole purpose in this post is to use a topical legal agreement for promoting the public understanding of law.
(By way of background, I am not an American lawyer, but an English lawyer with experience of contracts and civil litigation who has spent part of their career dealing with American contracts and civil litigation, and this post draws on principles I believe are common to English and American contract law.)
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Let’s start by looking at the agreement – click and open tab here.
It is, in essence, a seven-page agreement – and so pages 2 to 8 of the pdf are the ones to focus on.
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A preliminary question is how seriously we should take the agreement as something agreed to by both Epstein and Giuffre – was it a one-sided imposition, or something freely negotiated with both sides getting legal advice?
Clause 9(c) tells us ‘This Settlement Agreement was negotiated and entered into by the Parties with the advice and assistance of respective counsel.’
This means that it is not, say, a standard form contract – but one which has been negotiated by lawyers with each party having legal advice (and the lawyers are even listed at the end of the document).
This in turn means a court will take seriously what was agreed, and it will seek to give effect to what was agreed between the legally advised parties.
This is reinforced by clause 9(a), which provides that the parties ‘confirm and acknowledge that this Settlement Agreement is being entered into without any duress or undue influence, and that they have had a full and complete opportunity to discuss the terms of the Settlement Agreement with their own attorneys.’
Of course, such a provision can – in principle – be disapplied if it is factually untrue and there was actual duress.
On the face of it, this was not an agreement imposed by one party on the other, but one which was negotiated by both parties with the benefit of legal advice.
So, again on the face of it, this is an agreement by which both Epstein and Giuffre intended to be bound.
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With that preliminary question addressed, we come to the first big question.
What was the purpose of the agreement?
This is what can be called a question of construction – putting together the agreement as a whole so that we can then, as the next stage, interpret any constituent part.
With any legal instrument, and especially contracts, construction precedes interpretation.
Here there is a clue to the purpose in the title: Settlement Agreement and General Release.
This title indicates the agreement is doing two things – and you will see that these two things are, in turn, set out respectively in clauses 1 and 2.
But before we get to clauses 1 and 2 we can also see, almost as a recital, that the parties Giuffre and Epstein both entered the agreement so as to ‘resolve the pending litigation’ between them.
This litigation is then set out in clause 1: the parties agree to dismiss a civil claim brought by Giuffre against Epstein in the Florida courts.
But clause 1 only covers part of what was agreed.
For clause 2 then sets out the General Release.
This further provision sets out a more general release than ending one particular case.
Here Giuffre accepts a substantial sum (US$500,000) – as opposed to say a nominal sum – in return for the release.
In respect of Epstein the release provides that Giuffre shall ‘remise, release, acquit, satisfy, and forever discharge [Epstein][…] from all, and all manner of, action and actions of [Guiffre] , including State or Federal, cause and causes of action (common law or statutory), suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, and demands whatsoever in law or in equity for compensatory or punitive damages that [Giuffre] ever had or now have, or that any personal representative, successor, heir, or assign of [Giuffre] hereafter can, shall, or may have, against Jeffrey Epstein […] for, upon, or by reason of any matter, cause, or thing whatsoever (whether known or unknown), from the beginning of the world to the day of this release.’
This is a comprehensive list of things for which Giuffre agrees she cannot now sue Epstein.
Epstein was not only released from the current case but other cases, State and Federal.
If Giuffre was ever to litigate against Epstein again, then Epstein’s lawyers would have sought to rely on this release and have the case thrown out.
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But.
The release is not just in respect of Epstein, but also for other persons.
I will now quote the provision again but with what I had omitted now in bold:
Giuffre shall ‘remise, release, acquit, satisfy, and forever discharge [Epstein] and any other person or entity who could have been included as a potential defendant (“Other Potential Defendants”) from all, and all manner of, action and actions of [Guiffre] , including State or Federal, cause and causes of action (common law or statutory), suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, and demands whatsoever in law or in equity for compensatory or punitive damages that [Giuffre] ever had or now have, or that any personal representative, successor, heir, or assign of [Giuffre] hereafter can, shall, or may have, against Jeffrey Epstein, or Other Potential Defendants for, upon, or by reason of any matter, cause, or thing whatsoever (whether known or unknown), from the beginning of the world to the day of this release.’
These provisions in bold purport to extend the General Release granted to Epstein to other persons or entities – to give them exactly the same protection from further state and federal lawsuits as Epstein.
The term in bold, however, is not clearly drafted.
One reading is that the Other Potential Defendants are those who, on the facts alleged in the Florida litigation, could have been added as defendants to that litigation.
This would perhaps make sense as a matter of construction, as this agreement settles the case in respect of civil wrongs – torts – alleged to have happened in respect of which the Florida court had or has jurisdiction.
This reading is reinforced by the provision in clause 1 that the Court will be asked to retain jurisdiction to enforce the terms of this settlement agreement.
Clause 7 expressly provides that the parties envisaged this matter also capable of being litigated in federal courts (bold added):
‘In the event of litigation arising out of a dispute over the interpretation of this Settlement Agreement, the prevailing party shall be entitled to recover its cost of litigation, including attorneys’ fees and other reasonable costs of litigation. Should the federal court not retain jurisdiction, the Parties (and any third party) agree that the courts of the 15™ Judicial Circuit of Palm Beach County shall have exclusive jurisdiction over the subject matter and shall have personal jurisdiction over the Parties (and third parties).’
What the agreement does not seem to envisage, however, is the matter being litigated in another state, other than Florida.
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In my view, the General Release probably should be constructed as providing protection to Other Potential Defendants in respect of the issues raised in the Florida proceedings.
(This narrow construction would be notwithstanding the General Release is in more general terms than the dismissal in clause 1.)
So, if Andrew – by reasons of residence/jurisdiction, or the facts alleged by Giuffre in the Florida case – was not capable of being a defendant to the Florida proceedings then – as a matter of construction – then it is difficult for me to see how he can take the benefit of the General Release.
The agreement would not have been for him.
In essence: if Andrew could not have been jointly or separately liable for the tort claim within the Florida jurisdiction then the General Release may not apply.
That said: a judge could take a wider view of what the General Release covers, and that it covers not just the Florida allegations.
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There is, however, a possible problem here for Giuffre’s lawyers – for the term Other Potential Defendants must mean something.
The term Other Potential Defendants cannot mean nothing – for this is a negotiated and formal agreement, and the presumption is against surplusage.
If Giuffre’s lawyers contend that the General Release does not extend to Andrew, they must be able to explain who actually was to be covered by by the term Other Potential Defendants.
What Giuffre’s lawyers need to be able to do is to show who would be in the class of Other Potential Defendants – if not Andrew.
And if they can give a plausible meaning to that phrase without it including Andrew then they will address this problem.
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Now we turn to interpretation, as opposed to construction.
Some commentators, with little or no background in contract law, have gone straight to the term Other Potential Defendants and speculated what that phrase could mean.
But a clause is not a legal instrument, and still less a selected quote from a clause.
Yes, Andrew – like you reading this – is a potential defendant: indeed everyone other than Giuffre is.
But a settlement and a General Release in respect of a Florida case is unlikely to create a legal basis of releasing all potential defendants everywhere in the world in respect of any claim brought by Giuffre about anything – not least because the Florida court would not have jurisdiction to enforce such a general release.
In whatever way Other Potential Defendants is to be interpreted as including and not including, it is not an exercise in anything goes.
Other Potential Defendants cannot be interpreted as including Andrew if, as a matter of construction, the agreement would not apply to him.
On the other hand, if Andrew could plausibly have been added as a defendant to the original Florida case, then the phrase can be interpreted so as to include him.
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But.
Even if the agreement can be constructed so as to cover Andrew and the phrase Other Potential Defendant interpreted as including him, there are two further problems for his lawyers.
The first is that, whatever is said on the face of the agreement, there can be rules of law and public policy that may preclude reliance on such an agreement by a defendant in another case in another state.
The essence of Andrew’s objection is that Giuffre should not be allowed to sue him for alleged civil wrongs – that she should not even have access to a court for a determination of her case.
No court will simply nod-along with such a contention – it is a serious matter to remove a person’s right of access to a court.
And so even if Andrew can be brought within the terms of the General Release, a judge may find as a matter of policy that the claim brought by Giuffre should be heard anyway.
A court, of course, would not be likely to do this if the claim was brought against Epstein (or his estate), as he was full square within the terms of the General Release.
But Andrew is at least one step away.
The second further problem is that, even if the agreement can be constructed as to cover Andrew and the phrase Other Potential Defendant interpreted as including him, it may not be legally open to Andrew directly to enforce the provision.
Andrew was not privy – that is, a party – to the original agreement (and, indeed, he is not even named).
This legal principle of privity of contract prevents a stranger to a contract either taking the benefit or bearing the burden of an agreement to which they are not a party.
In essence: it would have been for Epstein (or his estate?) to enforce the term protecting Other Potential Defendants, and not Andrew or another potential defendant directly.
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For completeness, you will see the agreement also provides the following:
‘It is further agreed that this Settlement Agreement represents a final resolution of a disputed claim and is intended to avoid litigation. This Settlement Agreement shall not be construed to be an admission of liability or fault by any party. Additionally, as a material consideration in settling, First Parties and Second Parties agree that the terms of this Settlement Agreement are not intended to be used by any other person nor be admissible in any proceeding or case against or involving Jeffrey Epstein, either civil or criminal.’
Some commentators have leapt on this provision, but I do not think it takes us in any direction very far (though the judge may disagree).
It is not Giuffre who is seeking to rely on the settlement agreement – but a third party.
And the terms are not being relied on by Andrew as admissible evidence of liability or otherwise, but on a question of law in respect of jurisdiction.
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As I aver above, I am not an American lawyer, but an English lawyer with experience of contracts and civil litigation who has spent part of their career dealing with American contracts and civil litigation.
But even if this agreement were under English law, I could not confidently predict what a judge would do.
This is because the agreement – while clear in its primary aim of protecting Epstein from further suit – is not clear about third parties, and this is no doubt because that the position of third parties was not the main purpose of the agreement.
The agreement has been taken from its primary context of protecting Epstein and into a context which the parties perhaps did not envisage.
And so it is not a surprise that the agreement is less clear in this context.
Had the lawyers for the parties in this agreement expected this contract to be used by third parties, then the provisions in respect of third parties would be set out more clearly – but they did not, and so they are not.
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We are currently awaiting the judge’s decision on whether Andrew can rely on this agreement.
In my view, Andrew’s lawyers have the far harder task.
They have to show that, as a matter of construction and interpretation, the General Release covers him when he is not named and is not a party to the agreement; that no rule of law and policy means he loses that protection; and that he can enforce the protection regardless of the lack of privity.
All this, so as to extinguish Giuffre’s right of access to the court, which no court will do lightly in any case.
Giuffre, in turn, only has to succeed on one of these points – though her lawyers will need to explain what Other Potential Defendants means if not the likes of Andrew.
And even if Andrew succeeds on this technical defense, Giuffre may still win on appeal.
In summary and in conclusion: Andrew’s lawyers should be prepared to defend the substantial claim, rather than to rely on this technical defense.
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