On July 5, 2018, the First Department issued a decision in Weksler v. Weksler, 2018 NY Slip Op. 04976, holding that the agreement to the terms of settlement on the record did not constitute a binding agreement, explaining:
On November 10, 2016, the parties put the broad outline of the terms of their settlement agreement on the record. The terms included the payment of a sum certain by defendants in exchange for plaintiff’s interest in defendant Bruce Supply Corp. and five other defendant entities, and would be structured with a lump sum down payment and 15 annual installment payments. When the motion court asked whether the parties intended to be bound by the settlement, counsel for both sides stated that the settlement was subject to the execution of a formal settlement agreement and corporate documents, and defendants’ counsel stated that it would be an extensive agreement because of the transfer of shares. In their ensuing attempts to consummate the settlement, the parties were not able to reach an agreement on certain terms, including when the installment payments would be made, when plaintiff’s corporate shares would be transferred, whether plaintiff would receive security during the 15-year payment period, and the default provisions that should be included.
Given the number of open terms not contemplated by the stipulation of settlement but customarily included in corporate buyout agreements and the parties’ understanding that the on-the-record stipulation was subject to further documents, the stipulation of settlement is an unenforceable agreement to agree.
(Internal quotations and citations omitted).
Under New York law, whether agreement to some, but not all, terms of an agreement creates a binding contract can be a close question, the answer to which can turn on whether all the key terms of a contract have been agreed to and whether the parties intended to be bound the initial agreement or whether it was only an agreement to reach an agreement in the future. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.
Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.