“I was in a motor vehicle accident a while back; it was only a fender bender and nothing serious. I caused the accident and at the scene of the incident, the other driver and I made an agreement, in terms of which I paid him an amount of R3500.00 cash for his damages. Two years have passed since the accident and I now received a summons, in terms of which an amount of R25 452.00 is demanded from me for damages. It was my understanding that the other driver and I have made an agreement to settle the dispute, What should I do?”

In order to answer your question, it is necessary to first define this agreement entered into between you and the other driver. This agreement as entered into is a compromise or settlement (transactio), it is a contract which as its object the prevention, avoidance or termination of litigation. This agreement has the effect of res iudicata irrespective of whether it is embodied in an order of court.

Compromise is therefore an absolute defence to any action based on the original claim. What this means is that if you are summonsed for the damages sustained to the motor vehicle you can raise the defence of compromise in your pleadings as an absolute defence.

The onus of proof however is on the party who alleges that a compromise has been reach, which will result in the fact that you, who alleges that an agreement was reached on the day of the incident will first testify in court and proffer the terms and circumstances in which this compromise was reached.

If the court find that there was indeed a compromise reached, then the plaintiff will not be successful with his claim against you for the damages.

A compromise may be set aside on the grounds that it was fraudulently obtained or on the grounds of mistake, provided that the error vitiated true consent and did not merely relate to the motive of the parties or to the merits of the dispute, which was the purpose of the parties to compromise.

As a compromise is a contract, other contractual defences, such as impossibility of performance or illegality of the compromise, are also available to a party who wishes to rebut the compromise.

In practice, you will get that the parties who was involved in an accident at the scene or shortly thereafter enter into an agreement to settle the dispute. The one party will however despite this agreement, still claim with his/her insurance company for his damages to double reimburse for the damage. The insurance company as per its policy will in an attempt to recoup damages from you issue summons for the collection.

It is important to understand that most if not all the policy documents provided to you by your insurance company explicitly requires from you not to enter into an agreement with the other driver before you have discussed the terms with your insurer and if you do, your insurer will be relucted to pay you for the damages sustained. In some instances, insurance companies have sued their own client based on the fact that they have entered into a compromise without their consent and have claimed double damages.

It is thus advisable to do the following in the instance above:

If you are the party who caused the accident and enters into a compromise – ensure that you proof of the compromise in this regard it might be advisable to have an agreement drawn in writing and when payment is made, rather use eft than cash as there will be proof of payment.

If you are the party who receives the money – first call your insurance company and establish if you may enter into the agreement, secondly ensure that your damages sustained to your vehicle is in fact the amount on which you settle as there will be no second bite at the cherry, thirdly ensure that the agreement is reduced in writing.

Reference List:

• Amler’s Precedents of Pleadings, Seventh Edition, LexisNexis, Harms, page 97 - 98