NYLJ “Settlement Agreement Enforceable in Absence of Written Agreement”

By Thomas E.L. Dewey and Christine Kim

Parties engaged in settlement discussions often reach an agreement in principle by exchanging emails. While working toward a settlement, it is common for parties to email proposed terms and settlement amounts without necessarily expecting that their communications will be enforceable. Elysium Health v. ChromaDex, No. 22-cv-1059 (Lead), 22-cv-1153 (XAP), 2023 WL 7037442 (2d Cir. Oct. 26, 2023) illustrates that settlement terms can be enforceable without a formal, executed agreement if the parties express mutual assent and intention to be bound.

In determining whether to enforce a settlement agreement that was not reduced to a writing, courts will closely examine parties’ communications with one another to discern their contemporaneous intent, taking into account the material terms negotiated and words like “we have an agreement”. The Elysium decision makes clear that, if the parties indicate that there has been a meeting of the minds and have not expressed an intent not to be bound absent a writing, a court can enforce a settlement agreement between them, even if the agreement also resolves a case pending in another jurisdiction.