A Binding Agreement Or “A Concept Of A Plan”?

The Tennessee Court of Appeals enforced a settlement agreement based on the email communications between the opposing attorneys

Extreme Excavation contends on appeal that the communications between the parties’ attorneys contained all the material terms of the settlement, making the correspondence an enforceable contract. We agree. The October 14 letter from Mr. Hayes’s attorney was an offer. Extreme Excavation’s attorney’s response of October 19 was a rejection and a counteroffer, which Mr. Hayes’s attorney accepted on October 22. Thus, a valid contract was formed on October 22, whereby the parties agreed that Mr. Hayes would pay Extreme Excavation $25,000; the parties would execute a written settlement agreement and release; each party would bear their own attorney fees and discretionary costs; and Mr. Hayes would pay court costs.

Response to dissent

In the present case, the dissent contends that the parties did not reach a valid settlement agreement because there were still terms remaining to be decided, as evidenced by Mr. Hayes’s attorney’s comment that “we can finalize the settlement when I return.” It is well-settled that contracts must have terms of sufficient definiteness to allow courts to give them exact meanings. United Am. Bank of Memphis v. Walker, 1986 WL 11250, at *1 (Tenn. Ct. App. Oct. 10, 1986). Here, however, neither Mr. Hayes nor the dissent adequately explains what terms remained to be decided. The parties agreed that Mr. Hayes would pay $25,000 to Extreme Excavation; all parties would dismiss their claims and execute releases; Mr. Hayes would pay court costs; and the parties would pay their own discretionary costs and attorney fees. Despite Mr. Hayes’s attorney’s statement about future finalization of the settlement, the essential terms were already finalized. The only step remaining was for the parties to put their agreement in writing and sign the agreement, a step that Beaman makes clear is not required for a determination that a contract had already been formed. Given that this was a straightforward breach of contract claim and counterclaim for monetary damages, there is simply nothing left for the parties to agree upon.

Justice Bennett’s dissent is linked here.

It is evident to me that what we have here is an agreemment to agree or “concepts of a plan” of settlement if you will. as such, there is no binding agreement.

(Mike Frisch)