H. Correspondence as a Binding Preliminary Settlement Agreement
I'm gonna sit right down and write myself a letter / And make believe it came from you / I'm gonna write words, oh, so sweet / They're gonna knock me off my feet.
—Joe Young67
Settlement negotiations frequently occur as a series of correspondences by means of e-mail, fax, and written letter.68 When used to conduct settlement communications, written communications carry a substantial risk that they will collectively form a binding settlement agreement. When settlement negotiations are conducted by the exchange of correspondence, whether by e-mail, fax, or letter, the party describing terms of a desired deal bears the risk that the communication will become binding with an indication of acceptance by the other side. The result is that parties may be surprised that they are suddenly bound by a settlement agreement.69 Thus, attorneys must confront the practical realities that negotiations frequently occur, at least in part, by e-mail, and that e-mail communications are usually short and only minimally describe the most important points of a proposed settlement. Thus, even when legally binding, these communications tend to be preliminary in the sense that all parties expect to eventually execute a formal, integrated, written settlement agreement.
A series of written correspondence can suffice to form a binding preliminary settlement agreement. A binding settlement agreement does not need to be confined to a single, integrated document. Instead, a series of correspondences can result in a nonintegrated yet binding settlement agreement, even when none of them contains all of the terms of the deal. Instead, when the correspondences collectively indicate agreement on material terms of the deal, the parties are likely to be bound to the agreed-upon terms.70 Even if none of the e-mails declares, "We accept!," the correspondences can still form a binding settlement agreement on grounds of acceptance by the parties.71 Even when the terms are discussed orally in a jurisdiction that requires settlement agreements to be in writing, later confirmation of agreement by e-mail can bind the parties.72 In addition, settlement by e-mail correspondence in many jurisdictions is not undermined by the lack of a handwritten signature, even when the agreement must satisfy the statute of frauds.73
It doesn't take much for a binding settlement agreement! For a study in brevity in binding settlement agreements, e-mail correspondence provides excellent material. For example, a fully enforceable settlement agreement was created by replying affirmatively to the following e-mail, which outlined terms of the deal only as: "This confirms that we have settled this case on the following terms: Elrod deeds property interest back to Waddle, Both [sic] parties sign full release, Waddle bears no court costs."74 In addition, the following e-mail sufficed for...
