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A state trial court in Massachusetts held that an “agreement in principle” reached at mediation was enforceable as written even though the parties could not come to an agreement regarding final settlement terms.
In Targus Group International, Inc. v. Sherman, No. 044907BLS1, 2006 WL 2205508 (Mass. Super. Ct. July 24, 2006), Targus and Sherman entered into an Agreement in Principle (Agreement) after two days of mediation. Following mediation, the parties exchanged drafts of proposed final settlement papers, but they never reached a final agreement.
Targus moved for summary judgment, arguing that the Agreement was a binding settlement agreement even though the parties continued to negotiate final terms.
Citing the rule that “[n]o contract otherwise binding is be treated as a nullity solely because it is a contract to execute still another document or instrument in the future,” the Court held that the parties were bound by the Agreement.
In reaching its holding, the Court observed that the Agreement “was a result of an elaborate process of sophisticated mediation, with all the trappings of formal presentations by principals, accompanied and guided by counsel, and facilitated by one of Boston’s most respected mediators.” Moreover, as the Court noted, the Agreement nowhere stated or suggested “that the parties intend only to be bound by the execution of some more detailed agreement.”
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