LAW OF OBLIGATION ACT, PART 6

Part 6

COMPROMISE CONTRACT 

  • 578. Definition of compromise contract

(1) A compromise contract is a contract which is entered into in order to render a contestable or ambiguous legal relationship incontestable by way of mutual concession. Amongst other things, uncertainty as to whether a claim can be enforced is also deemed to be ambiguity.

(2) It is presumed that the parties will waive their claims as a result of the compromise contract and acquire new rights on the basis of the compromise contract.

  • 579. Validity of rights of third parties

A compromise contract does not affect the rights of third parties which arise from contestable or ambiguous legal relationships.

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