Oral Agreements in Family Law

by Matt Shaw

The parties orally agree in divorce court. Each party wants this case done now, and so do you. The judge offers to let you prove it up and you do so, creating a record and dutifully checking off eleven or twelve points of agreement. This may occur with a pre-decree (temporary) agreement. Each party testifies to agreeing and understanding.?You walk out of court relieved you have finished what had been such a contentious case. You promptly dictate the judgment and settlement documents and send them to your client, who has questions and makes changes. You send them to opposing counsel who responds one week later with a three-page correspondence that resembles a counter-offer.?You appear before the judge and confess you cannot produce signed documents, while opposing counsel excoriates you for misstating the agreement and re-igniting the case.

???????????An oral agreement may spur more litigation that it purportedly resolves. Even inexperienced attorneys know oral agreements foreseeably result in opposing parties arguing about what they did and did not, say, do or agree.?If written agreements invite healthy doses of dissention (and they do), oral agreements invite unbridled claims against the other party, the attorney, and even the court.

???????????A decade or two ago, the family court entertained a number of oral prove-ups. Parties appeared at court, sometimes for a pre-trial or settlement conference, reached an agreement and decided to put it on the record, impromptu. Subsequently, an attorney prepared the written Judgment for Dissolution of Marriage, Marital Settlement Agreement and perhaps a Joint Parenting Agreement or Parenting Plan. You know what happened next. Vehement disagreement ensued. Even with a transcript, the attorneys and judge had to sort out the oral agreement, discussing after-the-fact definitions, parameters, details and omissions.

???????????Rule #1: Don’t do oral agreements. An attorney’s best advice: put it in writing and have all parties sign it. This is especially applicable to family law orders and judgments, where I am tempted to regale you with war stories about litigants who swore they didn’t agree, or deny they were even present in court. ?Some of those litigants had actually signed agreed orders or marital settlement agreements. Perhaps the legal nightmare of oral agreement is a rite of passage each attorney must endure.

????Rule #2: If you do an oral agreement, make sure you do it right. The IMDMA references both oral and written agreements, stating at 750 ILCS 5/502(a): “To promote amicable settlement of disputes between parties to a marriage attendant upon the dissolution of their marriage, the parties may enter into an agreement containing provisions for disposition of any property owned by either of them, maintenance of either of them and support, parental responsibility allocation of their children, support of their children . . . an agreement allocating the sole or joint ownership of or responsibility for a companion animal . . . Any agreement pursuant to this Section must be in writing, except for good cause shown with the approval of the court, before proceeding to an oral prove-up.” This Section recently had provided that agreements could be oral or agreed, but now mandates written agreements, unless good cause is shown.

???????????Oral agreements still occasionally haunt Family Courts. Illinois cases provide legal analyses in support of a proper oral agreement, and assist practitioners in anticipating, and defending against, arguments a disgruntled party may raise on appeal. Beware that the objecting party may employ four main arguments on appeal: 1) no oral agreement/contract reached; (no meeting of the minds/ mutual mistake of fact), 2) attorney bound client without authority, 3) unconscionability, and 4) coercion or duress.

Two family law cases well illustrate the circumstances under which oral agreements occur and were upheld. These fact patterns also provide perspective for the legal analyses which follow. In In re Marriage of Baecker, 983 N.E.2d 104, 367 Ill.Dec. 950, (3rd Dist. 2012), “the petitioner, Garth Baecker, filed a petition for dissolution of marriage in the circuit court of Tazewell County on February 10, 2010. On June 10, 2010, Garth was convicted and sentenced to prison for attempting to kill the respondent, Terry Baecker. On March 23, 2011, the parties indicated that they had reached an agreement in the dissolution proceedings. The trial court read the terms of that oral agreement into the record and instructed counsel to prepare the final judgment. Garth, who was incarcerated in the Dixon Correctional Center throughout the course of this dissolution proceeding, refused to sign the prepared judgment incorporating the oral settlement. On April 19, 2011, Terry filed a motion to enforce the judgment and for entry of final judgment of dissolution. Shortly thereafter, on April 25, Garth filed a motion to vacate the oral settlement and set the matter for trial on all remaining issues. On June 7, 2011, the trial court heard the argument of the parties on their successive motions and entered a final judgment of dissolution of marriage, incorporating into the decree the oral settlement agreement over Garth's objection.” In re Marriage of Baecker at ? 1.

In In re Marriage of Haller, 980 N.E.2d 261, 366 Ill.Dec. 461 (5th Dist. 2012) in 2007, Suzie Haller filed a petition for dissolution of marriage from Robert Haller. On March 17, 2011, the parties appeared for trial but reached a settlement agreement, which was read into the record. In re Marriage of Haller at ? 1. That morning the parties and their attorneys negotiated a settlement agreement that Suzie's attorney, Larry LeFevre, read into the record. At the beginning of the hearing, the trial court stated that if either party did not understand the terms of the settlement agreement, had any questions, or disagreed with it, that party needed to tell his or her attorney. The court stated that any issues would be clarified such that “at the end we will have on the record a full, final, complete and binding settlement.” In re Marriage of Haller at ? 4.

The court went on to state: “Now, it's going to be typed so that you will be able to read it later and you'll have it, but it isn't like you're going to be able to get it at home in a couple of weeks, look at it, and have buyer's remorse or second-guess your decision, you know. You've made some concessions. You got some things you wanted; you gave up some things. People on the way home when they leave these hearings sometimes they remember the things they gave up and forgot [ sic ] the things they got and then they—so, it isn't like-so, you do need to understand today is the day. It isn't like when you get it you can make changes. So, the idea is as you hear this is—it's also known, if you don't understand something and you have questions, ask the questions. We want to make sure everybody understands it.” In re Marriage of Haller at ? 4.

“Both parties testified that it was their desire that the court approve the agreement and that they understood that the agreement was binding. The trial court approved the agreement, entered judgment in a docket entry, and ordered Suzie's attorney to prepare a written judgment to be filed on a later date. Subsequent to the hearing, but before a written judgment was entered, Robert filed a motion to set aside the settlement agreement. Suzie submitted a proposed written judgment and filed a motion for entry of judgment. Following a hearing, the trial court denied Robert's motion to set aside and granted Suzie's motion for entry of judgment. Robert filed a motion to reconsider, which was denied.” In re Marriage of Haller at ? 1.

???????????Each of these cases demonstrate how well the court documented, and upheld, the oral agreement. Nevertheless, a party contesting such an agreement, may posit several arguments (numbered 1-4) to the contrary. The counter-arguments supplement our cautionary tale, and are nicely set forth in the portions of Baecker and Haller that follow.

1.?????No agreement/contract was reached (no meeting of the minds):

???????????This catch-all argument claims that no agreement or contract was reached at all. It is ubiquitously argued when a litigant contests an oral agreement.

?“The State of Illinois encourages the settlement of claims and, to that end, settlement agreements may be oral. Kim v. Alvey, Inc., 322 Ill.App.3d 657, 669, 255 Ill.Dec. 267, 749 N.E.2d 368 (2001). “When a party seeks to vacate a property settlement incorporated into a judgment of dissolution of marriage, all presumptions are in favor of the validity of the settlement. [Citation.] A settlement agreement is not typically subject to appellate review because an agreed order ‘is a recordation of the agreement between the parties and * * * not a judicial determination of the parties' rights.’ [Citation.] However, ‘[a] settlement agreement can be set aside if it is shown that the * * * agreement is unconscionable.’ [Citation.]” In re Marriage of Bielawski, 328 Ill.App.3d 243, 251, 262 Ill.Dec. 137, 764 N.E.2d 1254 (2002). The determination of whether a valid settlement occurred is in the discretion of the trial court and its decision will not be reversed “unless the court's conclusion is against the manifest weight of the evidence—that is, unless an opposite conclusion is clearly evident.” Webster v. Hartman, 309 Ill.App.3d 459, 460, 242 Ill.Dec. 777, 722 N.E.2d 266 (1999).” In re Marriage of Baecker at ? 25.

“It is Garth's position that there is no oral settlement agreement … because on March 23, 2011, there was never a contract or agreement formed. …[T]here was no requisite “meeting of the minds,” there existed a mutual mistake of fact in regard to the attorney fees and the sale of the ML–320 Mercedes and that, due to his absence from the hearing, he did not get his day in court. We disagree.” In re Marriage of Baecker at ? 26.

Prior to accepting the oral settlement agreement into the record, the trial court thoroughly admonished Terry of her rights and responsibilities under such an agreement. In re Marriage of Baecker at ? 27.

In In re Marriage of Haller, the appellate upheld the existence of a valid agreement, stating: “A marital settlement agreement is a contract. In re Marriage of Bohnsack, 2012 IL App (2d) 110250, ? 9, 360 Ill.Dec. 199, 968 N.E.2d 692. “A settlement agreement is in the nature of a contract and is governed by principles of contract law.” K4 Enterprises, Inc. v. Grater, Inc., 394 Ill.App.3d 307, 313, 333 Ill.Dec. 198, 914 N.E.2d 617, 624 (2009). Oral agreements are binding when there is an offer, an acceptance, and a meeting of the minds as to the terms of the agreement. Id. For the contract to be enforceable, the material terms must be definite and certain, meaning that the court is enabled from the terms and provisions, under proper rules of construction and applicable principles of equity, to ascertain what the parties have agreed to do. Id. “A meeting of the minds between the parties will occur where there has been assent to the same things in the same sense on all essential terms and conditions.” Pritchett v. Asbestos Claims Management Corp., 332 Ill.App.3d 890, 896, 266 Ill.Dec. 207, 773 N.E.2d 1277, 1282 (2002).” In re Marriage of Haller at ? 26.

“It is not necessary that the contract provide for every collateral matter or every possible future contingency which might arise in regard to the transaction. It is sufficiently definite and certain to be enforceable if the court is enabled from the terms and provisions thereof, under proper rules of construction and applicable principles of equity, to ascertain what the parties have agreed to do.” Morey v. Hoffman, 12 Ill.2d 125, 130–31, 145 N.E.2d 644, 647–48 (1957). The maintenance terms were definite and certain, and a court can ascertain what the parties agreed to do. “When any essential term of an agreement is left to future negotiation, there is no binding contract.” Hintz v. Lazarus, 58 Ill.App.3d 64, 67, 15 Ill.Dec. 546, 373 N.E.2d 1018, 1020 (1978). The conditions on which maintenance was to terminate were not left for future negotiation. They were set out at the hearing. Maintenance was to terminate after four years or on any of the statutory conditions for termination. While the written judgment was to list the statutory terms, it was not changing the essential terms.” In re Marriage of Haller at ? 28.

???????????“When an agreement is clear, certain, and definite in its material provisions, it is by its very nature of being presented to the court, enforceable. In re Marriage of Lorton, 203 Ill.App.3d 823, 827, 148 Ill.Dec. 850, 561 N.E.2d 156, 159 (1990). In the instant case, the terms of the agreement were set forth orally before the court in great detail, and nothing further remained to be resolved. The trial court approved the agreement and made a docket entry that the case was settled and judgment was entered. The trial court directed counsel to draft a written judgment incorporating the terms of the agreement, but the settlement agreement did not need to be reduced to writing to make it valid and binding. The purpose of the written judgment was simply to memorialize what had already been done and to finalize the case. The mere reference to a future written document does not negate the existence of a present contract where the parties have assented to all the terms of the oral agreement. Gibson–Terry, 325 Ill.App.3d at 323, 259 Ill.Dec. 336, 758 N.E.2d at 465. The trial court's decision that the oral settlement agreement was a binding contract is not contrary to the manifest weight of the evidence.” In re Marriage of Haller at ? 30.

2.?????Attorney bound client without authorization:

“An attorney's statement may bind the client to a settlement agreement when the client later claims to have misunderstood the terms of the settlement ( Sheffield Poly–Glaz, Inc. v. Humboldt Glass Co., 42 Ill.App.3d 865, 868, 1 Ill.Dec. 555, 356 N.E.2d 837 (1976)), particularly when the settlement is made in open court or in the presence of the client. Szymkowski v. Szymkowski, 104 Ill.App.3d 630, 60 Ill.Dec. 310, 432 N.E.2d 1209 (1982). Mr. Dunn clearly had the authority to bind Garth to the terms of the settlement and did so.” In re Marriage of Baecker at ? 29.

The trial court and appellate cited In re Marriage of Clarke, 194 Ill.App.3d 248, 141 Ill.Dec. 174, 550 N.E.2d 1220 (1990), wherein an attorney, from the law firm representing the mother, bound the client to a change of custody, even though the primary attorney handling the file was not at court and later produced an affidavit showing he had no authority to agree to a change of custody. In re Marriage of Baecker at ? 29.

In Clarke, Id. at 251, 141 Ill.Dec. 174, 550 N.E.2d 1220, “in finding insufficient grounds to vacate the agreed order, … this court held that even if there was a misunderstanding as to the change from joint custody, it did not automatically negate her attorney's authority to enter the order that he did.” Id. In re Marriage of Baecker at ? 30.

3.?????Unconscionability:

“A marital settlement agreement is unconscionable if there is “an absence of a meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Internal quotation marks omitted.) In re Marriage of Steadman, 283 Ill.App.3d 703, 709, 219 Ill.Dec. 258, 670 N.E.2d 1146 (1996) (quoting In re Marriage of Carlson, 101 Ill.App.3d 924, 930, 57 Ill.Dec. 325, 428 N.E.2d 1005 (1981)). The fact that an agreement “merely favors one party over another does not make it unconscionable.” (Internal quotation marks omitted.) In re Marriage of Gorman, 284 Ill.App.3d 171, 181, 219 Ill.Dec. 652, 671 N.E.2d 819 (1996) (quoting In re Marriage of Hamm–Smith, 261 Ill.App.3d 209, 220, 198 Ill.Dec. 763, 633 N.E.2d 225 (1994)). “To rise to the level of being unconscionable, the settlement must be improvident, totally one-sided or oppressive.” Gorman, 284 Ill.App.3d at 182, 219 Ill.Dec. 652, 671 N.E.2d 819. Duress may make an agreement between spouses unconscionable. In re Marriage of Richardson, 237 Ill.App.3d 1067, 1082, 179 Ill.Dec. 224, 606 N.E.2d 56 (1992). “Acts or threats must be legally or morally wrongful to constitute duress [citation], and duress is measured by an objective test, rather than a subjective one [citation].” In re Marriage of Tabassum, 377 Ill.App.3d 761, 775, 317 Ill.Dec. 228, 881 N.E.2d 396 (2007). “The person asserting duress has the burden of proving, by clear and convincing evidence, that he was bereft of the quality of mind essential to the making of the contract.” In re Marriage of Hamm–Smith, 261 Ill.App.3d 209, 215, 198 Ill.Dec. 763, 633 N.E.2d 225 (1994). We review a trial court's finding of duress under a manifest weight of the evidence standard. Wermers Floorcovering, Inc. v. Santanna Natural Gas Corp., 342 Ill.App.3d 222, 224, 276 Ill.Dec. 762, 794 N.E.2d 1012 (2003).” In re Marriage of Baecker at ? 41.

4.?????Coercion:

“Robert [Haller] argues that the haste in which the settlement agreement was reached coerced the agreement. In In re Marriage of Steadman the court found that the trial court did not abuse its discretion in denying the wife's petition to vacate a judgment of dissolution incorporating an oral settlement into the final judgment. In re Marriage of Steadman, 283 Ill.App.3d 703, 713, 219 Ill.Dec. 258, 670 N.E.2d 1146, 1153 (1996). The wife argued that two hours of negotiations formed the basis of the oral settlement agreement and that the hasty negotiations deprived her of the opportunity to make a meaningful choice. Id. at 705, 710, 219 Ill.Dec. 258, 670 N.E.2d at 1148, 1151. The court declined to mechanically apply an analysis based on the number of hours spent negotiating. Id. at 710, 219 Ill.Dec. 258, 670 N.E.2d at 1151. The court held that the negotiations did not deprive her of the opportunity to make a meaningful choice because “the significance lies not in the fact that the parties negotiated for two hours; but, that they negotiated for two hours at arms’ length with the aid of counsel.” Id. The court found that while the wife may have been unhappy with the settlement terms, her unhappiness did not negate the fact that she stated under oath to counsel and the trial court that it was her agreement. Id. It further found that the trial court presented the wife with the opportunity to forego the provisions of the settlement and have a hearing, but she declined and stated that the terms testified to comprised her agreement.” Id. In re Marriage of Haller at ? 35.

“In the instant case, the parties negotiated at arms’ length with the aid of counsel. The record contains numerous statements by Robert which demonstrate that the agreement was acceptable to him, that he wanted to proceed with the settlement, and that he knew he had the alternative of proceeding to trial. His statements affirming the agreement and his failure to object to the terms of the agreement when they were recited to the trial court at the hearing, clearly evidence that he freely agreed to the settlement. Robert failed to prove by clear and convincing evidence that the oral agreement was coerced.” In re Marriage of Haller at ? 36.

????When defending an oral agreement on appeal, you may cite the rule of forfeiture, namely that a party who fails to raise an issue at the trial level forfeits his right to raise it on appeal. Note that the appellate still has the authority to address the appellant’s issues, although I perceive that may especially be so when ruling in favor of the appellee. In Haller, ? 24 Suzie asserted that Robert's arguments are forfeited because he failed to raise them in the trial court. The appellate court agreed that Robert raised new issues in this appeal but stated: “[W]e may still address them if we choose to do so. “The rule of forfeiture is a limitation on the parties, not the court. [Citation.] A reviewing court may override considerations of forfeiture in furtherance of its responsibility to maintain a sound and uniform body of precedent.” Smith v. Menold Construction, Inc., 348 Ill.App.3d 1051, 1056–57, 285 Ill.Dec. 116, 811 N.E.2d 357, 362 (2004). In re Marriage of Haller at ? 24.

???????????Whether you are closing the deal, or trying to jettison the misunderstanding, if you must participate in an oral agreement, be aware that the statute requires “good cause shown” as to why it is not a written agreement. Be cognizant that what you say may legally bind your client. Document the agreement clearly and specifically. Write notes for a comprehensive checklist (include extra-curriculars, life insurance, taxes, exemptions, et cetera). Be aware, and advise your client, of possible omissions. Read the details of the agreement into the court record and have each party testify to it. Consider making a speak-now-or-forever-hold-your-peace statement on the record. If a given party is not present, make a thorough record that the absent party’s attorney has bound them to the agreement. Listen for the judge to make a solid record about each party’s option to first put it in writing, each party’s waiver to first put it in writing, and each party’s understanding of his and her rights and responsibilities. Make sure the court makes a finding that an agreement has been reached on all issues, that all terms of the agreement have been entered into the record, and the court approves the agreement and binds the parties thereto. Obtain the transcript. Be prompt and accurate in preparing the judgment and settlement documents.

Then, hold your breath. Sometimes an oral agreement isn’t worth the paper it’s written on.

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