Mediated Settlement Agreements: No Signed Writing Equals No Enforceable Agreement
After several grueling hours spent mediating their dispute, the parties reach a mutual agreement on the terms of settlement. A collective sigh of relief echoes through the conference room as the matter has finally been resolved… or has it? As the Florida Rules of Civil Procedure provide, “[i]f a partial or final agreement is reached, it must be reduced to writing and signed by the parties and their counsel, if any.” Fla. R. Civ. P. 1.730(b). Similarly, “[t]he mediator shall cause the terms of any agreement reached to be memorialized appropriately and discuss with the parties and counsel the process for formalization and implementation of the agreement.” Fla. R. For Certified and Court-Appointed Mediators R. 10.420(c) (2021). The enforceability of a mediated settlement agreement, therefore, requires that the agreement be in the form of a signed writing.
Generally speaking, “[s]ettlement agreements are to be interpreted and governed by the law of contracts.” To insure its enforceability, a settlement agreement “must be sufficiently specific and mutually agreeable as to every essential element…”. A settlement agreement that is too vague or ambiguous in its meaning or effect or one that is lacking in specificity may be incapable of implementation and, thus, enforceable.
There is no requirement that a mediated settlement agreement be overly complex or contain an inordinate number of provisions. As indicated above, the agreement should, however, be sufficiently specific and contain the essential and material terms of the parties’ agreement. The following are a few provisions to consider including in a mediated settlement agreement to help insure the clarity and enforceability of the parties’ agreement:
Effective Date. By defining the agreement’s effective date, it should eliminate any doubt about whether the mediated settlement agreement becomes effective on the date of its execution or whether the agreement becomes effective upon the happening of some future event. Clearly setting forth an agreement’s effective date may also aid the parties or, if necessary, the court, in determining whether some act required under the agreement was timely performed or completed to the extent the time for performance is measured from the agreement’s effective date.
Purpose / Intent. In this provision, the parties may consider including a brief discussion of the purpose of their agreement and/or explaining what they intend to accomplish by entering into the agreement. By including a clear and concise discussion of the purpose of the agreement and/or explaining the parties’ intentions in settling their dispute, the parties may reduce or eliminate the need for the court to resort to extrinsic evidence in order to ascertain the parties’ intent.
Settlement Amount / Payment Terms. To the extent a monetary payment or payments are required as a component of the parties’ mediated settlement agreement, it is reasonable to expect that one or more of the following items be included in the agreement: the total amount of money to be paid under the agreement, whether the settlement amount is to be paid as a lump sum or in installments, the amount of each installment payment, the date(s) by which each installment payment is due, the number of installment payment(s) required, and the manner in which the payment(s) are to be made. The inclusion of a provision in which the amount and terms of payment are clearly set forth may not only help to insure the enforceability of the parties’ agreement, but may also help encourage compliance with the terms of the agreement.
Release. In many cases, a mediated settlement agreement will contain language of release. Depending upon the circumstances of the dispute, the release may be mutual or unilateral. In some cases, the release becomes effective upon the parties’ execution of the agreement. In other cases, the release may become effective only upon the occurrence of some future event. Including a release provision in a mediated settlement agreement may help to effectuate the parties’ intent and purpose with respect to a release.
Dismissal. Will the lawsuit be dismissed upon the parties’ execution of the mediated settlement agreement? Will the lawsuit be dismissed only after all sums of money due under the agreement are paid in full? Will the lawsuit be dismissed by filing and serving a Notice of Voluntary Dismissal or will the entry of an order or judgment dismissing the action be required? Will the dismissal be with or without prejudice? The parties to a mediated settlement agreement may be well-advised to consider including in their agreement a provision in which the specifics of dismissal are clearly spelled out.
Default. The inclusion of an explanation of the requirements and obligations of each party to a mediated settlement agreement may prove vital to the agreement’s effectiveness and enforceability. What happens, however, when a party fails to satisfy her requirements or refuses to fulfil her contractual obligations? Including a discussion of those events considered events of default together with a discussion of the remedies available to a party upon the occurrence of an event of default, may not only help insure the parties’ compliance with the terms of their agreement but may also provide a roadmap for the parties to follow upon the occurrence of an event of default.
Whether your next mediated settlement agreement contains one or more of the aforementioned provisions or whether it contains other provisions more suitable for your client’s specific needs, the ultimate goal should be to secure an enforceable, written agreement that clearly and accurately reflects the parties’ intentions.