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Settlement agreement may be binding even without signature

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in Discrimination and Harassment,Human Resources

Here’s something to consider when deciding whether to settle a case. An oral agreement may be binding even if the parties never actually signed a written version. It’s a contract as long as the parties clearly agreed to the essential terms. In other words, you cannot change your mind and refuse to sign the final agreement if the terms were already agreed to.

That’s why it’s crucial to hash out important details in advance and only then include those terms in any subsequent oral agreement.

Recent case: John McDonnell sued his former employer, Engine Distribution, over alleged age discrimination. The parties, through their lawyers, agreed on three essential terms, including the payment due McDonnell.

Both parties then refused to sign off, and sued. The 3rd Circuit Court of Appeals held them to their oral agreement. (McDonnell v. Engine Distribution, No. 07-3957, 3rd Cir., 2009)

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