You have entered into a written settlement agreement to pay a certain dollar amount in exchange for the ownership share of a corporation currently held by your business partner with whom you have a dispute. While the essence of the agreement is clear, the agreement is mere bare bones that did not specify all of the details including a date by when payment is required to be made. The other party changes its mind and says the agreement is not enforceable. Are you out of luck?
Maybe not. Florida courts have found similar agreements enforceable and a reasonable time to perform the terms will be implied. See Faruk v. Madison Acquisitions Corp., 317 So. 3d 196 (Fla. 3d DCA 2021). In Faruk, there was an appeal of a trial court order enforcing a settlement agreement, more specifically, an offer of judgment in litigation. In summary, the party appealing the trial court order said there was no settlement because the settlement acceptance communication included language requiring that payment be made by a certain date that was not acceptable to the party. Notwithstanding, the district court of appeal (“DCA”) agreed with the trial court and affirmed citing De Cespedes v. Bolanos, 711 So. 2d 216 (Fla. 3d DCA 1998), and Indep. Mortg. & Fin., Inc. v. Deater, 814 So. 2d 1224, 1225 (Fla. 3d DCA 2002). Faruk at 196-197.
In Bolanos, during a corporate dissolution action in the trial court, the parties entered into settlement negotiations and reached an agreement which one party argued was missing certain essential terms including “…a definite duration of time within which to collect the account receivables subject to the 50/50 split…”, among others. Bolanos at 217. The DCA stated in relevant part that “[t]he absence of a general time of performance, however, is not fatal to the enforceability of this contract. ‘The general Florida rule is that when a contract does not expressly fix the time for performance of its terms, the law will imply a reasonable time.’” (citing Denson v. Stack, 997 F.2d 1356, 1361 (11th Cir.1993); Doolittle v. Fruehauf Corp., 332 So.2d 107, 109-10 (Fla. 1st DCA 1976)). Bolanos at 218. “Even though all the details are not definitely fixed, an agreement may be binding if the parties agree on the essential terms and seriously understand and intend the agreement to be binding on them.” Id at 217-218 (citing Blackhawk Heating & Plumbing Co., Inc. v. Data Lease Fin. Corp., 302 So.2d 404, 408 (Fla. 1974)).
Also, in Bolanos, the DCA indicated settlement agreements are highly favored and should be enforced whenever possible and the material elements were agreed upon by the parties. As such, the DCA concluded that the trial court should have enforced the settlement agreement. Id at 218.
Similarly, in Deater, the DCA reviewed a trial court order in a case which arose from a dispute over a mortgage brokerage agreement. The agreement was ambiguous as to the time for payment of a brokerage fee. Deater at 1225. The DCA stated in pertinent part “[w]here an agreement does not specify the time for payment or provides for an indeterminate or indefinite time, the law implies that payment will be made within a reasonable time….” (citing Hatcher v. Miller, 427 So.2d 1039, 1040 (Fla. 1st DCA 1983)). Id.
The DCA reasoned that the agreement was unambiguous as to the obligation for payment of a brokerage fee, a reasonable time (almost two years) had elapsed since the event triggering the obligation, and payment was due. Id. Accordingly, the DCA ruled in favor of the party seeking payment. Id at 1226.
So what is the takeaway here? In short, if an agreement has certain unclear or missing provisions such as the time for performance of the agreement’s payment terms, the agreement may still be enforceable if the essence is clear.
It is advisable to have legal counsel assist with the preparation of contracts to try to minimize future issues. Please contact Guala Law Firm for assistance. Our Contact page and contact information are at this link.
