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Posted: March 25, 2015

Stipulation of Settlement Not Enforceable if Not Properly Memorialized

On March 18, 2015, the Second Department issued a decision in De Well Container Shipping Corp. v. Mingwei Guo, 2015 NY Slip Op. 02090, reversing a trial court order enforcing a settlement that was not fully memorialized.

In De Well Container Shipping Corp., the parties entered into an agreement in principle to settle their disputes. The Second Department reversed a trial court order enforcing that agreement, explaining:

Absent the formalities required by statute, a stipulation of settlement is not enforceable. Pursuant to CPLR 2104, an agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered. The stipulation must be definite and complete, and all material terms must be included.

In this case, the alleged written stipulation of settlement dated May 16, 2012, entitled “Agreement in Principle,” was not signed by all the parties to the litigation, and the agreement did not state that the two signatories to the agreement intended to bind all the parties to the agreement’s terms. Further, as a material term of the agreement at issue was contingent upon the parties’ executing a formal agreement, the agreement constituted a mere agreement to agree, which is unenforceable.

(Internal quotations and citations omitted) (emphasis added). Sometimes, we litigators make the same types of errors that business people make that create so much business for us. Until you meet the requirements for memorializing a settlement in CPLR 2104, there is no settlement.

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