Also known as: disputed claims · contested claim
Written by attorneys · grounded in primary & secondary sources — see below
A claim whose validity or amount is contested by the opposing party. The existence of an actual disagreement on these points is required before settlement communications receive special evidentiary protection.
Demetrius Douglas sent Dawson Steel a demand letter claiming $450,000 for undelivered components. Dawson Steel replied that only $275,000 was owed and offered that sum to resolve the matter. At trial Douglas sought to introduce the reply to prove the larger amount was due. The court excluded the evidence because the communication occurred during negotiations over a disputed claim.
Darius Dixon confronted Dwight Dorsey and took cash from him at gunpoint, asserting the money satisfied an unpaid invoice whose amount Dorsey had long contested. The prosecution charged Dixon with theft. The court rejected any claim-of-right defense because the facts involved only a disputed claim to a sum of money rather than title to specific property.
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A claim is disputed when the parties genuinely disagree about its validity or the amount owed. Mere inability to pay an admitted debt does not trigger the rule. The disagreement must exist before the settlement communications occur.
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Yes. The rule bars both offers of valuable consideration and any conduct or statements made during compromise negotiations about the claim. Factual admissions intertwined with settlement talks receive the same protection.
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Yes. Directors must pay or make reasonable provision for known claims, including disputed or contingent ones, before distributing assets to shareholders. Reserving funds for such claims is a proper winding-up step.
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