Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Settlement Negotiators Beware: Verbal Negotiations May Have Unintended Consequences

By John M. Halan
August 19, 2003

Many corporate and litigation counsel know that oral settlement agreements may be enforceable. However, such counsel should be aware that terms discussed as mere possibilities during settlement negotiations may be mistakenly or knowingly misconstrued by an opposing party as an actual settlement agreement or an offer to settle. The former, or acceptance of the latter, could lead to two undesirable results if opposing counsel seeks enforcement by the court. First, the court could require an unwanted lengthy and expensive evidentiary proceeding to determine whether or not such an agreement occurred ' an outcome which would be based solely on the credibility of the witnesses involved. Second, and even worse, the court could enforce an unintended settlement agreement. In fact, if the underlying lawsuit is pending in federal court, such unintended and unwanted results could occur even if the otherwise applicable state law has a writing requirement.

Based on a policy favoring the settlement of lawsuits and the avoidance of costly and time-consuming litigation, many courts have held that a trial court may enforce an oral settlement agreement. See, eg, Kukla v. National Distillers Products Co., 483 F.2d 619, 621 (6th Cir. 1973); Taylor v. Gordon Flesch Co., 793 F.2d 858, 862 (7th Cir. 1986). This may be true even if the parties contemplate that a written agreement embodying the terms agreed to will later be prepared and executed. See, eg, Matter of Estate of McCormick, 926 P.2d 360, 363 (Wyo. 1996)

However, the operative word is 'agreement.' What happens if the alleged oral agreement is disputed? Or what happens if the alleged oral settlement agreement is based on an acceptance of terms discussed merely as possibilities during settlement negotiations? Some states require that settlement agreements be in writing or at least be evidenced by a signed document. See, eg, Michigan Mut. Ins. Co. v. Indiana Ins. Co., 637 N.W.2d 232, 234-235 (Mich. App. 2001)(citing Michigan Court Rule 2.507(H)). In some such states, until the writing requirement is met, a party may disavow an otherwise undisputed oral settlement agreement. See, eg, Gojcaj v. Moser, 366 N.W.2d 54, 59 (Mich. App. 1985)

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.