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Current Developments in the Commercial Divisions of the
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Posted: August 22, 2014

Exchange of E-mails Did Not Create Binding Settlement Agreement

On August 6, 2014, Justice Schmidt of the Kings County Commercial Division issued a decision in Rubin v. Deckelbaum, 2014 NY Slip Op. 32150(U), declining to find that an exchange of e-mails had created a binding settlement agreement.

In Rubin, the defendant moved for judgment dismissing the complaint based on an out-of-court settlement agreement that the parties and their counsel had negotiated by e-mail but not reduced to a single writing. The court denied the motion, explaining:

CPLR 2104 provides, in relevant part, that an out-of-court agreement between parties or their attorneys relating to any matter in an action is not binding upon a party unless it is in a writing subscribed by him or his attorney. Three pertinent principles are deducible from the decisions applying CPLR 2104. First, for an enforceable agreement to exist, all material terms must be set forth and there must be a manifestation of mutual assent. Second, if the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed. Third, the attendant circumstances, the situation of the parties, and the objectives they were striving to attain must be considered to determine whether the parties’ words and deeds establish their intent to enter into a binding agreement.

(Internal quotations and citations omitted) (emphasis added).

The court found that (1) the e-mails were ambiguous as to the nature of the agreement; (2) when negotiating the written settlement agreement, which the parties never signed, the parties reserved their rights to change the terms until it was finalized; and (3) after the parties exchanged drafts of the settlement agreement, they asked for the court’s help in finalizing it, representing that the agreement had not yet been finalized. Based on those findings, the court held that there was no binding settlement agreement.

The court concluded its analysis with this quote: “For the present, email should only be used with care, and not for stipulations on anything really important.”

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