A settlement agreement is governed under the tenets of contract law – there needs to be a meeting of the minds for there to be a settlement. Ideally, you want this meeting of the minds to be memorialized in writing in a settlement agreement. However, what if it is not memorialized in a written settlement agreement?
As is true of contracts generally, a settlement agreement is formed “only when one party makes an offer and another party accepts it.” An acceptance sufficient to create an enforceable agreement “must be (1) absolute and unconditional; (2) identical with the terms of the offer; and (3) in the mode, at the place, and within the time expressly or impliedly stated within the offer.” This ensures that there is a “meeting of the minds” between the parties on all essential terms. “[W]here it appears that the parties are continuing to negotiate as to essential terms of an agreement, there can be no meeting of the minds.”
Basner v. Bergdoll, 44 Fla.L.Weekly D2593a (Fla. 1st DCA 2019) (internal citations omitted).
By way of example, in Basner, an automobile accident occurred. The accident was caused by a vehicle driven by the child of the owners. The owners’ insurer sent a check to the plaintiffs and a release that required the plaintiffs to release the owners and their child. The plaintiffs marked up the release because they did not want to release the owners’ child and signed the release, but held onto, and did not cash, the check. The plaintiffs did not hear back from the insurer and ultimately returned the check and sued the owners and their child.
The owners moved for summary judgment contenting there was a settlement agreement and they had been released. The trial court agreed and enforced the release as to the owners. The appellate court, however, reversed because there was NO meeting of the minds. The plaintiffs marked up the release and, thus, did not agree to the terms the insurer proposed in issuing the check, which was a release of the owners and the owners’ child. Instead, the plaintiff’s made a counteroffer in marking up the release in agreeing to release only the owners. When the plaintiffs did not hear back from the owners’ insurer, they returned the check ultimately terminating their counteroffer. Hence, there was NO meeting of the minds.
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