Are Agreements in Mediation Binding?

Clients often want to know whether an oral agreement achieved in confidential divorce mediation is binding. The short answer is that all valid agreements entered into during divorce mediation (including some oral agreements) are binding. However, in practice the issues are a little more complex.

In this article we’ll examine the two most important factors that determine the validity and enforceability of all agreements. The first topic is the manner in which the agreement is memorialized. We will focus on what works best to craft a good agreement depending on the needs of the clients. The second topic concerns the fundamental legality of the agreement itself. There are specific legal requirements in order for a contract to be enforceable, some of which often arise in divorce cases. However, before we cover these topics, we will address something which rarely comes up in civil cases but often comes up in divorce cases. That is what is often called a "Side Agreement".

Side Agreements

When divorcing couples are amicable and share a high level of mutual trust, they frequently reach agreement without a lot of conflict. In these cases, the parties often wait to memorialize agreements until they have completed the mediation process. However, if the parties in the divorce are contentious and in the midst of a high-conflict divorce, it’s helpful to memorialize agreements as soon as the couples reach them.

These incremental (or placeholder) agreements are sometimes called “side agreements”. Often these side agreements are needed to hold the accord on some topics in place so that the negotiations on the unresolved matters do not go sideways or backward. Without a side agreement, a deal can go sideways when one of the parties tries later to revise the terms to an accord reached previously. Negotiations go backward when one of the parties tries to “unwind” the earlier agreement in order to obtain leverage on some later topic in their divorce. 

A side agreement “locks in” the aspects to which the parties have agreed. The parties can no longer revisit these items as bargaining chips or rehash them if one or the other is not getting their way on another issue. For example, parents may memorialize a side agreement about day-to-day visitation and custody while they negotiate details on holiday and vacation visitation, or vice versa.

As is discussed below, side agreements are enforceable just like any other contract.

Enforcement of Side Agreements

Once an accord is reached, there a number of things which can happen. The parties can both perform in which case the matter is resolved successfully. Another outcome is that the parties mutually agree to revise the side agreement in which case it becomes a moot point. Alternatively, one party can a) refuse to perform or b) breach or c) try to unwind the Side Agreement over the opposition of the other party. When this happens, the question of enforceability or remedy comes to the forefront.

If a party to mediation enters into a valid oral or written side agreement and then fails to perform, the other party can request the Judge to order the specific performance agreed to in the side agreement. Imagine, for example, the parties going through a divorce need to sell their house and mediate the details concerning the sale. Then one party or the other refuses to sign the listing agreement with the Realtor. The other party would ask the Judge to force the ex-spouse to sign the listing agreement. Normally the Judge would make that order with no hesitation. 

Another outcome to a valid oral or written side agreement occurs when one party breaches the terms of the accord. Say for example, the couple agrees in mediation to sell the family car and split the net proceeds. The party with the car sells it, but refuses to give the ex-spouse half of the net proceeds. The aggrieved party will ask the Judge for money damages. The Judge will enforce their side agreement as if it was a regular contract.

A third outcome happens when a party to a valid oral or written side agreement seeks to unwind the mediated agreement. If both parties mutually agree, then they simply cancel the side agreement. But if one side wants performance and the other seeks to unwind, the Judge will conduct a hearing and enter a ruling. The party seeking to unwind will have to make a compelling argument in order to prevail. . In fact I have never even seen it attempted in any of my cases. I suppose technically, it is possible, but the grounds would have to be extraordinary such as the agreement was illegal or the result of extortion. We will discuss legality below. 

Memorialization and Enforcement of Agreements

In divorce mediation, all negotiations are confidential. However, once the parties reach a firm agreement, the parties will need to know that they can rely on their agreement. In short, they want assurances that their oral agreement achieved in confidential mediation can become binding and enforceable in Court. Obviously, there must be a mechanism to accomplish this. 

Let’s take a look at the various ways agreements reached in mediation are memorialized. These apply to both side agreements and final agreements.

Oral or Handshake Agreements

In California divorce mediations, oral agreements (with or without a handshake) can be enforceable so long as they are legal agreements. (More on the question of legality below.) A legal oral agreement must meet several conditions: a) it needs to be written up within three days; b) it needs to be "recorded” by a reliable source such as a Court Recorder or a tape recorder (Most cell phones have an audio recorder feature which would satisfy this requirement.); c) the parties must specifically state that they intend for the oral agreement to be a firm (binding) agreement.

Handwritten Summary Initialed by Parties

In face-to-face mediations the parties will often initial a handwritten summary of the agreement achieved in their mediation session. They then expect to have it formally written up shortly afterward. These handwritten summaries create a binding agreement once initialed. I had one mediation case (a civil case, not a divorce case) where one party tried to back out of a settlement after signing off on my handwritten notes at the end of the face-to-face mediation. In this case, I had carefully summarized my notes out loud to the parties and verified the terms of each clause in their settlement carefully. I then had the notes initialed by the parties.

The other party to the dispute sought enforcement of the mediated agreement. The Judge ruled that the initialed notes summarizing their agreement were binding and enforceable. The Judge ordered the reluctant party to comply with the terms of the agreement he had initialed.

Summary and Confirmation via Email

In my virtual mediation practice, I often use email to summarize the details which the parties have agreed upon. I send the email summary out to each party promptly after the session ends. I then ask each party to email me a reply stating that the summary is an accurate reflection of their agreement and that they agree to have it be binding. I have never had one of these agreements fall apart. 

I also have the capacity to record the conference call and order a written transcript if needed, but so far I have not ever required this service.

A Signed Side Agreement

As mentioned above, “side agreement” is the term used when some issues in a case are resolved while other issues remain contested. Side agreements are beneficial throughout the divorce mediation process as couples deal with some specific issues and leave others for later discussions. An example of a typical use of a side agreement is in divorce cases involving the sale of real estate. They may have a myriad of other issues to decide, but as to the real estate sale, once they agree on who will choose the realtor, what the price will be, who will clean up, when they will move out and so forth they want to be able to rely the binding nature of their agreement as the rest of the divorce process goes forward.

The side agreement cannot be converted to a formal Judgment because other issues remain to be resolved. However, at the same time, the parties seek to prevent confusion or repudiation of the matters resolved. A side agreement is written up and signed by each party. It is an enforceable contract. In my experience, the best practice is to accomplish this immediately after the mediation session is concluded. At the end of the divorce proceedings, after all matters are resolved, the terms of the side agreement are rolled into the final Judgment.

Formal Memorandum of Understanding

If the mediation session is successful at resolving all or most of the major issues in a divorce case, often the parties will ask for a memo of understanding to be typed up right on the spot. The memo will summarize in shorthand fashion the accord reached by the parties. It will be signed and dated before the mediation session concludes.

The memo will state that a formal settlement agreement will be drafted promptly. The formal document will usually contain legal boiler plate and other clauses in "legalese" that reflect the intent of the parties' agreement in legal specificity. For example, in a memo, I might write that "both parties waive spousal support". In a formal settlement agreement that one line about both parties waiving spousal support might expand to three or four full paragraphs.

Stipulation and Order or Marital Settlement Agreement

The gold standard of making a mediated agreement binding is to reduce it to a Stipulation and Order which is signed and approved by the Judge. This is a two-step process: 1) create a form of valid oral or informal agreement during the mediation session; 2) draft the Stipulation and Order to be signed by both parties and submitted to the Judge.

If the mediated agreement resolves all the matters in the divorce case, then it is written up in a Marital Settlement Agreement (MSA). Both parties (and their attorneys) carefully review the MSA. After each party agrees on the language, the parties sign. It is then submitted to the Judge as part of the final Judgment.

Legally Binding Agreements

An agreement must be validly enforceable in order to be binding. Agreements made between divorcing couples have the same requirements as other contracts in order to be enforceable. These contracts must be validly made and must be legal.

A Valid Contract

A valid contract requires specificity in the terms. This means that the agreement must identify a) who is going to act; b) what they are agreeing to do; c) when they will accomplish it or when they will start doing it; and d) how much they are going to do. Some agreements have a built-in consequence to deal with inadequate performance. Here are some “everyday” hypotheticals.

If Bobby is to pay Terry money, then the answers in the simple phrase "how much by when" would suffice to make this an enforceable agreement.

If Chris and Dana agree that they will file taxes jointly and that Chris will prepare the forms "promptly", the context will usually support an interpretation which is close enough to a firm date so that their agreement is valid.

If Carson and Dylan mediate and agree that they will sell their house and that Carson will pay for "reasonable repairs" and Dylan will pay all costs to address "deferred maintenance" before putting it up for sale, this may or may not be specific enough to be a valid agreement.

The validity is in question because the term "reasonable repairs" could be interpreted in wildly divergent ways. One person might think that the whole house needs to be repainted while another would believe that a little touchup is all that is required. Thus it is not specific enough. In a similar fashion, the term "deferred maintenance" is probably too vague to distinguish between what is a repair and what is deferred maintenance. However, if Carson and Dylan have a good idea what these terms mean…say for instance that repairs are all work costing under $500.00 and deferred maintenance is any work done on the house costing over $500.00 then the context between them might be sufficient.

A Legal Contract

A legal agreement requires that the subject matter itself be legal. A legal contract must also be entered into freely and knowledgeably. Both of these points have important ramifications in the context of divorce mediation.

Agreement Must Concern a Legal Subject Matter

As a matter of public policy, an agreement about an illegal subject is not valid in Court. Thus two bank robbers cannot legally agree to divide up their loot and expect a Court to enforce their accord given that the subject matter of their agreement was illegal.

This rarely occurs in a divorce setting. The only example I can think of off the top of my mind is that the parties in divorce mediation cannot legally agree in mediation to supplant the Judge's constitutional power and authority to issue rulings in matters concerning the best interests of their child. This means they cannot divest the Judge of jurisdiction over any issues related to child custody, visitation and child support. Thus, any agreement to "waive" child support is void as a matter of law. In a similar fashion, any agreement regarding visitation can be revised if the Court finds under the current circumstances that a new visitation approach would be in the best interests of the child.

Only Contracts Which are Freely Made are Enforceable

Voluntary agreements in divorce mediations are generally valid and enforceable. In contrast, agreements extracted through force or threats of violence are unenforceable in Court. Thus, duress and intimidation cannot be present in the making of a valid contract. Agreements entered into through hard bargaining or accords resulting from difficult choices do not reach the level of intimidation or duress that would make an agreement unenforceable.

A skilled mediator helps keep the balance of power in the negotiations more or less even. In professional mediations, threatening words or behavior is not tolerated. This minimizes the possibility of a mediated agreement being entered into through duress. In my mediation practice, each party is given a chance to present their point of view. The give-and-take discussion lessens the likelihood of one party bullying the other party into an involuntary agreement.

Conclusion

Mediation is a way for couples going through a divorce to obtain legally enforceable agreements while keeping their negotiations confidential. A professional mediator can help guide the process to make sure the resulting settlement is binding.