IS AN ORAL SETTLEMENT AGREEMENT, MADE WEEKS BEFORE A TRIAL, BINDING IF IT IS ACCEPTED?

Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.

Lewis v. Gilbert, 14 Kan. App. 2d 201, 785 P.2d 1367 (1990).

This case addresses the following issue:

Is an oral settlement agreement, made weeks before a trial, binding if it is accepted?

This case dealt with an oral offer, oral acceptance, and cold feet. Id. at 201-02. Kansas law allows an offer for settlement to be made orally and is valid until rejected or a reasonable time passes. Id. at 203. Based on these facts, the plaintiff could not escape her verbal acceptance of a verbal offer for settlement. Id.

Plaintiff and defendant were involved in a car accident. Id. at 201. After the close of discovery, defense counsel made a verbal offer to plaintiff’s counsel. Id. at 201-02. A period of time passed, and then plaintiff accepted the offer, causing the defendant to cancel the jury trial. Id. at 202. The plaintiff quickly had a change of heart, and refused to sign the stipulation. Id. The defendant sought to enforce the settlement and asked the trial court to enter the dismissal without the plaintiff’s signature. Id.

The court began by noting that, under Kansas law, settlement agreements generally do not have to be in writing. Id. Thus, absent “any element of fraud or bad faith,” the court will enforce oral settlement agreements. Id. An exception does exist when a rule or statute requires a settlement agreement to be in writing. Id.

The plaintiff pointed to Kansas Supreme Court Rule 163 in this case. Id. at 204. This Rule, however, is permissive, rather than mandatory, only giving courts the option of refusing to give effect to written, signed settlements. Id. The optional nature of the Rule prevented this writing-exception from coming into play. Id. Thus, the court found it appropriate to enforce the agreement despite the plaintiff’s change of mind. Id.