Make Your Agreement Legally Enforceable
Experience shows that most mediation agreements are voluntarily followed by the parties who sign them. Indeed, studies show that people are even more likely to live up to the terms of a mediation agreement than they are to abide by a court order.
The reason is as simple as it is logical: People who help craft the solution to their own dispute and sign an agreement to abide by it are more likely to comply than people who are ordered to do something that they don’t want to do by a judge.However, it makes sense to protect yourself against the chance that the other party will buck this trend and refuse to honor the agreement. The best way to do this is to prepare your agreement as a legally binding contract. If the other side breaks the agreement, you will have the option of going to court to enforce it or seek compensation (unless you have opted for binding arbitration).
Q Don't bother writing a legally binding contract if enforcement isn't an issue.
There’s no point taking the time to draft a legal contract if you aren’t going to enforce the agreement—for example, if you would not want to enforce the agreement even if you could (such as in disputes between friends involving personal issues), or if so little money is involved that it wouldn’t be worth fighting over, even in small claims court.
There are a couple of different ways to make an agreement legally enforceable:
• write the agreement as a legal contract, or
• if a lawsuit is already pending, request a “consent judgment”—a court order that includes the terms of your agreement.
Agreements to take actions that are not legally required pose special enforcement problems. A court isn’t likely to order the other party to take an action (other than paying money), even if you both agreed to it in mediation. For example, if your neighbor promises to trim a tree in her backyard twice a year to keep it from blocking your view, a judge isn’t likely to order her to do it unless the tree is legally encroaching on your property.
One way to deal with this potential problem is to include a monetary fallback if the other side doesn’t live up to the agreement. In our tree example, the agreement could say that if your neighbor didn’t trim her tree as promised, you would be entitled to hire a tree service and she would have to pay the fee. Keep this kind of provision in mind if your dispute concerns an interpersonal or neighborhood problem.Now let’s look at the two ways to make a mediated agreement legally enforceable.
1. Write the Agreement as a Legal Contract
To make sure that you’ll be able to enforce your agreement, you will want to write it in the form of a binding contract. To accomplish this, the agreement must meet a handful of contract law requirements. Though the technicalities of contract law are beyond the scope of this book, here are the basic requirements your agreement will have to meet in order to be enforceable as a contract:
• The parties have the legal ability to make a contract. This is an easy requirement to meet, as long as both parties are adults. All mentally competent adults have the power (“capacity,” in legalese) to make a contract. Unless the other party is a minor or has a serious mental impairment, you have no problem.
• The agreement doesn't call for illegal actions. The terms of your contract must not call for an illegal act, such as gambling, prostitution, or (more commonly) a loan of money requiring a person to pay interest above the legal rate—somewhere between 10% and 12% in many states.
• The terms of the agreement must be clear. If your agreement is so vague that a reasonable person might have difficulty understanding it or carrying it out, it does not qualify as a contract. To guard against this, each provision should state clearly who does or pays what to whom, when, and how. (See Section B4, above.) For example, if you want the roof of your house ripped off and replaced with a new asphalt roof that has a 20-year guarantee, your agreement should say exactly that.
By contrast, an agreement that says only that the other party will “fix the roof’ may be too vague to be enforced as a contract.• There must be an exchange. To have a contract, both parties must do, or promise to do, something of value. (Lawyers refer to this action or promise as “consideration.”) As long as your agreement reflects either an exchange of services for money (“Rowan will pay Martin $200 dollars; Martin will reseal the driveway”) or reciprocal promises (“Smith will keep his dog indoors after 9 p.m.; Jones will call Smith before calling the police”), it will meet this requirement. Similarly, a promise not to file a lawsuit or badmouth someone is also valid legal consideration. It’s really not all that complicated—an agreement that lacks consideration because only one person has promised to do something (as in: “Betty will turn her pool lights off before 10 p.m.”) can easily be fixed by adding some reciprocal promise or act (“and Andy will stop calling the City to complain”).
• Everyone must agree to the contract terms. There must be evidence that both parties understand and agree to the terms of the agreement. The signatures of both parties at the bottom of the agreement will normally satisfy this requirement. But in a few states, agreements must explicitly state, in writing, that the parties intend them to be binding. Although not technically required in most states, including this type of statement is always a good practice. If your agreement is written or typed onto a printed form provided by the mediator or mediation service, look to see whether it contains a printed statement that the agreement is intended to be legally binding. It probably will. But if it does not, ask the mediator to insert a statement at the end of the agreement. The following statement should do the job:
The parties understand and accept the terms stated above and intend this agreement to be a legal contract, binding upon them and enforceable by a court of law.
0Get help if your agreement may be tough to enforce. If your dispute involved substantial amounts of money or important legal rights, you should consult with a lawyer who is familiar with contract law and local court rules for help in drafting your agreement.
2. Request a Consent Judgment
A lawsuit may be pending when you reach a mediated settlement. This is common if a judge referred the dispute to mediation in the first place. But it also can occur if one party suggests putting the court action on hold while you try mediation. Either way, you will probably have two options when writing up your agreement:
• ask the judge to dismiss the lawsuit and then write your settlement agreement in the form of a legally binding contract (see Section 1, above), or
• ask the court to approve the agreement and issue a consent judgment (sometimes called a consent decree) turning your mediated settlement into an official court judgment. If the other side violates the judgment, you can enforce it as a court order. By contrast, to enforce a settlement agreement or contract that is not made into a court order, you have to file a new lawsuit and get a judgment based on breach of contract.
If you are concerned that the other side may not honor the agreement, you will probably want to get a consent judgment. If you do not anticipate a compliance problem, however, you can skip the consent judgment—and avoid some added legal fees, court costs, and delay— and rely on the settlement agreement as a legally binding contract. (Some mediation agreements, such as those concerning child custody and visitation, will not be enforceable under federal and state laws unless they are approved by a judge and issued as a court order. For more on this, see Chapter 10.)
3. Remedies for Breach of a Mediated Agreement
Courts usually enforce mediated agreements. But how a particular court will enforce a particular mediation agreement depends on various factors, including how well the agreement was drafted, the type of actions called for under the agreement, the facts of the case, and the state law the court is applying.
Generally, agreements that call for the payment of money are much more likely to be enforced as contracts than are agreements that call for something more intangible (such as a promise to treat each other civilly, weed someone’s garden, or not call the police). It’s best to write these agreements to include a monetary fallback if someone doesn’t do a promised act. For example, if the private mechanic doesn’t fix your car as agreed, you can get the job done at another shop and make the first mechanic pay the bill.Here are the legal remedies that are generally available for breach of binding mediation agreements:
• Damages: The court can award you financial compensation for losses you suffered as a result of the other party’s breach. This is the most common way for a court to enforce an agreement.
• Rescission: If the other party fails to perform as promised but still expects you to live up to your side of the bargain, you can ask a judge to void the agreement and release both of you from your obligations.
• Specific performance: The court can order the other party to live up to the agreement—for example, for a bank to give you a mortgage or another person to sell you a piece of land. Courts generally will not order specific performance of contracts involving personal labor, such as requiring someone to paint your house or fix your car.
If your agreement contains an arbitration clause, you can get most of the same remedies at arbitration with less expense and delay than would be involved in a lawsuit. However, enforcing the arbitrator’s award would still require a court proceeding.
E.