Any recovery against such third person in excess of the compensation theretofore paid by the employer shall be paid forthwith to the employe . . . This Court has subsequently held that the agreement, in which the employer releases or waives its subrogation right against the claimant's third-party settlement recovery is valid under the Act, and that the claimant in such situation is entitled to the benefit of the bargain. Therefore, the Release is valid and enforceable under the Act, and the parties' rights and obligations set forth in Section 319 of the Act are inapplicable to this matter. 3 Employer nonetheless contends that even if the Release is valid under the Act, it is still void or voidable for lack of consideration and due to a mistake of law or fact, or duress. To form a valid contract, all of the essential elements, including consideration, must exist.
Consideration exists where there is a bargained-for exchange by the parties to the contract.
Generally, an agreement lacks consideration, if one of the parties is already legally bound to render the performance promised. It is also well established, however, that the surrender or compromise of a doubtful or disputed claim and forbearance to sue thereon constitute sufficient consideration. In this matter, Employer agreed to release all claims arising under Section 319 of the Act after Claimant's counsel raised during the negotiations the question of Employer's negligence in removing the safety devise from the machine. Employer decided to settle the dispute based on Claimant's promise not to contest its subrogation interests. Therefore, there was a bargained-for exchange.