WHEN A SETTLEMENT BECOMES BINDING

Published: July 24, 2026 | By: Roger Baker 9 min read

A settlement binds when the parties agree on its essential terms, even if the release and the rest of the paperwork remain to be worked out. In Buterman v Board of Trustees of the Greater St Albert Roman Catholic Separate School District No 734, 2016 ABQB 159 ("Buterman QB"), the Court of Queen's Bench upheld a tribunal's finding that a human rights complaint had been settled by an exchange of letters, and in Buterman v St Albert Roman Catholic Separate School District No 734, 2017 ABCA 196 ("Buterman CA"), the Court of Appeal agreed. Years of disputes about the settlement documents followed the deal, and none of them undid it.

The dispute arose from a human rights complaint, but the principles applied are the general law of contract that governs settling any dispute. The decisions answer three questions that recur whenever a deal is struck and then regretted. Can a rejected offer still be accepted? When is a settlement formed if the release and other documents are never actually signed? And what does it take to get out of one? This article works through each in the order the dispute raised them.

The Offer, the Rejection, and the Acceptance a Year Later

The Board removed Mr Buterman from its roster of substitute teachers in October 2008 because he is a transgender man who was transitioning, which the Board said was contrary to Catholic teachings (Buterman CA at para 4). He filed a human rights complaint on October 1, 2009 (at para 4). The next day, the Board offered $78,000, five years of substitute teaching pay, in exchange for withdrawal of the complaint, a covenant not to advance further complaints or legal process arising from his removal, and a standard release containing a confidentiality clause (at para 5). Mr Buterman rejected that offer (at para 5).

Almost a year later the Board made a different offer, this time of guaranteed substitute teaching at a treatment centre, and Mr Buterman rejected it too (Buterman CA at para 6; Buterman QB at para 14). The rejection letter carried a surprise. His counsel wrote that Mr Buterman "is willing to accept the proposal put forward by GSACRD on October 2, 2009", that "we expect that this offer is still open for acceptance notwithstanding Mr. Buterman's earlier rejection", and that once confirmation was received "we can discuss the details of the settlement" (quoted in Buterman CA at para 6). The Board answered the same day, September 8, 2010, advising that the October 2, 2009 offer "has remained open continuously" and agreeing to its acceptance (Buterman CA at para 7; Buterman QB at para 15).

The funding moved faster than the paperwork. The Board put $78,000 in trust within weeks and sent draft settlement documents, the parties' counsel discussed what the Board's lawyer called minor wording changes over several months, and in January 2011 Mr Buterman's counsel returned the settlement cheque "until agreement has been reached with respect to the settlement documentation", identifying only one issue to discuss (Buterman CA at paras 33 and 37–39; Buterman QB at paras 16–19). His counsel then ceased to act (Buterman QB at para 20). On April 10, 2011, Mr Buterman told the media that he had rejected the settlement because of the confidentiality clause, without communicating that position to the Board directly (Buterman CA at para 8; Buterman QB at para 22).

The Tribunal Split and the First Appeal

The dispute then moved to the Alberta Human Rights Tribunal. In 2014 the Board applied for a ruling that the Tribunal had no jurisdiction to hear the complaint because the parties had settled (Buterman CA at para 9). After a three-day hearing, a majority of the Tribunal found that a settlement contract had formed on September 8, 2010 and remained executory pending the documentation; the dissenting member found there was no settlement at all (at para 11). The Board then paid the funds and waived execution of the settlement documents, terms that existed for its own benefit (at paras 13–14). In February 2015 the Tribunal majority held the settlement fully executed and its jurisdiction at an end (at para 15).

Mr Buterman appealed both Tribunal decisions to the Court of Queen's Bench. The appeal judge reviewed the Tribunal's findings on the deferential reasonableness standard and dismissed the appeals, holding that the majority's conclusions fell within the range of acceptable outcomes (Buterman QB at paras 68, 137, and 140). The Court of Appeal in turn found the appeal judge chose and applied the correct standard, which framed everything that followed; the question at each level was whether the Tribunal majority's conclusions were reasonable, and both courts held that they were (Buterman CA at paras 22–25 and 61).

Can an Offer Survive Its Own Rejection?

Rejecting an offer generally kills it. The Tribunal accepted that rejection "'generally' extinguishes the offeree's right to accept", because the offeror must be free to take its offer elsewhere without the risk of being bound twice (quoted in Buterman CA at para 27). On these facts, though, the general rule gave way. This offer could only ever be made to Mr Buterman, it carried no time limit, and neither party faced any risk if it stayed open (at para 28).

The Court of Appeal held it was reasonable for the Tribunal to conclude the October 2, 2009 offer remained open for acceptance on September 8, 2010, particularly since Mr Buterman was the one who expressed interest in accepting it and the Board immediately confirmed it was available (Buterman CA at para 29). The court added that an alternative reading was equally reasonable, that the September 8, 2010 letter was itself a fresh offer on the original terms, which the Board accepted the same day (at para 29; Buterman QB at paras 77–79). On either analysis, it was reasonable to find that a contract formed that day.

Formation, Not Paperwork: The Fieguth Principle

Both courts anchored the analysis in Fieguth v Acklands Ltd. The parties themselves agreed it is the leading case on documenting, or "papering", a settlement (Buterman QB at para 101). Its central passage separates two stages:

In these matters it is necessary to separate the question of formation of contract from its completion. The first question is whether the parties have reached an agreement on all essential terms. (Fieguth, quoted in Buterman CA at para 31)

Once the essential terms are agreed, either party may put forward whatever releases or other documents it thinks appropriate without rescinding the settlement, because ordinary professional practice "cannot be equated to a game of checkers where a player is conclusively presumed to have made his move the moment he removes his hand from the piece" (Fieguth, quoted in Buterman CA at para 31). If the documents are accepted and signed, the executory contract becomes executed. If not, the parties keep talking, and neither is released unless one of them insists on terms that were never agreed or reasonably implied (quoted in Buterman CA at para 31).

The settlement here had four essential terms, all present in the September 8, 2010 correspondence. They were payment of $78,000, withdrawal of the complaint, a covenant against new complaints arising from the same circumstances, and execution of a release and confidentiality agreement (Buterman CA at para 43). Mr Buterman argued the draft documents added essential terms he never agreed to. He pointed to a covenant that named a wide group of Catholic educational entities and to confidentiality wording that went beyond the settlement's terms, and the Tribunal's dissenting member agreed with him (at paras 42–43). The majority drew a finer distinction, and the Court of Appeal found it a tenable one; "the execution of the release and confidentiality agreement was an essential term but the form of the document was not" (at para 44). The drafts were "minuting" a deal already made (at paras 41 and 44). As the Queen's Bench judge put it, the settlement "had crystalized even though the settlement documents had yet to be finalized" (Buterman QB at para 99).

Repudiation Is Rare, and It Must Be Accepted

A party unhappy with proposed settlement documents does not thereby escape the settlement. Fieguth warns that "[i]t will be rare for conduct subsequent to a settlement agreement to amount to repudiation", and that parties who reach a settlement "should usually be held to their bargains" (quoted in Buterman CA at para 46). The Board's drafts were consistently provided for comment, changes were discussed, and the Tribunal majority found the Board "was receptive to amendments to the documents at all times" (at paras 47–48). Nothing in that conduct showed an unwillingness to be bound.

Even a genuine repudiation changes nothing until the other side accepts it. The non-repudiating party must "by words or conduct" communicate an intention not to be bound (Buterman CA at para 49, citing Guarantee Co of North America v Gordon Capital Corp). Mr Buterman spoke to the media, but "at no time did he communicate his acceptance of the Board's repudiation (if any) to the Board" (at para 50). The Court of Appeal explained why the requirement bites hardest in this context:

The object of a settlement agreement is to bring an existing dispute to a close, not to create a situation where either or both of the parties can treat the agreement as merely another step in a continuing dispute. (Buterman CA at para 51)

The Queen's Bench decision states the practical rule for a party who dislikes the draft release. The remedy "would have been to propose changes to the form of release, not to unilaterally determine that he was no longer a party to the Settlement Agreement" (Buterman QB at para 109). The wording of the release was open for negotiation; the obligation to give one was not (at para 110).

Why This Settlement Was Not Unconscionable

Mr Buterman finally argued the settlement should be set aside as unconscionable, pointing to the breadth of the draft covenant and confidentiality terms. The factors courts consider include inequality of bargaining power, a substantially unfair bargain, the parties' relative sophistication, and the existence of genuine negotiations, and the Court of Appeal found none of them on the record (Buterman CA at paras 55–56). Mr Buterman had counsel through most of the negotiations and advanced his positions without difficulty (at para 56). Both courts accepted that some of the draft terms might have been unenforceable, and held that this was not a sufficient basis to undo the bargain; the appeal judge also noted that $78,000 represented five years of substitute teaching income (Buterman CA at paras 57–58; Buterman QB at paras 123–124). Unconscionability is an equitable and discretionary doctrine, and the court declined to exercise the discretion (Buterman CA at para 60).

What This Means When You Settle a Dispute

A settlement can be complete before anything looks signed. An exchange of correspondence that settles the essential terms can bind the parties, and the releases, covenants, and confidentiality language that follow are usually completion of the deal rather than conditions of it (Buterman CA at paras 31 and 44). A party who wants the documents' wording to be part of the bargain itself has to say so before agreeing, because afterward the disagreement is a drafting discussion, not an exit (Buterman QB at paras 109–110).

The decisions also show how little room there is to change your mind. The Tribunal majority found a settlement, its dissenting member disagreed, and the appeal judge and the Court of Appeal each found no reviewable error in the majority's conclusion (Buterman CA at paras 11, 16, and 61). The media statement changed nothing because acceptance of a repudiation must be communicated to the other party, and the returned cheque and unsigned documents changed nothing because the essential terms were already agreed and the drafts were completion of the deal (Buterman CA at paras 44 and 49–50; Buterman QB at para 99). What the law required at every turn was communication with the other party, first to form the deal, and then, if a true repudiation ever occurs, to accept it.