There are four factors to guide the inquiry regarding whether parties intended to be bound by a settlement agreement in the absence of a document executed by both sides. The court must consider (1) whether there has been an express reservation of the right not to be bound in the absence of a signed writing; (2) whether there has been partial performance of the contract; (3) whether all of the terms of the alleged contract have been agreed upon; and (4) whether the agreement at issue is the type of contract that is usually committed to writing. No single factor is decisive, but each provides significant guidance.
Appellant former employee filed an action against appellee employer for violations of the Americans with Disabilities Act, article 15 of the New York State Executive Law, N.Y. Exec. Law §§ 290-301, and ERISA. Prior to trial the parties negotiated a settlement, which appellant ultimately refused to sign. Appellee moved for an order to enforce the agreement, which the trial court granted. Appellant argued that the contract explicitly provided that it was not enforceable until all parties had signed it. Appellant challenged the judgment and the trial court reversed it and remanded the case.
Did an enforceable settlement agreement exist among the parties?
The court ruled that there was no difference between state and federal common law with respect to the determination of the point at which parties intend to be bound by a settlement agreement. The court noted that there was an express reservation in the agreement providing that it was not effective until signed by all the parties. The court found that there had been no partial performance, and that all the terms had not yet been agreed to by appellant despite his former counsel's statement to appellee's counsel that, "we have a deal." The court ruled that in any case the attorney's comment did not bind appellant absent his signature.