Is An Unsigned Settlement Enforceable?
Like so many legal situations, the answer to this question is that an unsigned settlement might be enforceable depending on the particular circumstances. A very recent Ontario Superior Court case, Prince v Nytschyk Estate, illustrates one circumstance when an unsigned settlement was enforced by the court.
The case originated with a claim by a woman against the estate of her late common law husband who had died without a will. The woman claimed a constructive trust over the house where they had cohabited, made a claim to be estate trustee without a will, and also claimed dependent's relief. Since she was only 52 and was likely to receive dependent's support for many years if successful, other potential beneficiaries thought it made good sense to settle the claims and negotiations were entered into.
The main disputes between the parties were settled but before the final details could be resolved and before the paperwork signed, the woman died. As one can imagine, the other beneficiaries' motivation to settle evaporated. What had previously seemed like a good deal based on the claimant's life expectancy was gone. They tried to wiggle out of the agreement.
The woman's estate brought an application to enforce the unsigned settlement. The beneficiaries argued that all the terms were not agreed to and, therefore, the settlement had never been a full agreement.
The court found for the woman's estate ruling that the essential terms of the settlement had been agreed to and a binding settlement had been reached. At law, a settlement is a contract and a contract is reached when a) there is mutual intention to create a legally binding relationship and b) agreement on all the essential terms are reached.
The court also considered that there are strong policy reasons to encourage the settlement of litigation. As such, the settlement, even though unsigned, was enforceable.
The Lesson: While it is still advised to draft and sign settlement agreements, courts will enforce a settlement if the essential terms are agreed to. It is important to be clear in the settlement process what is and is not agreed to in order to ensure that, if a settlement is not intended, there is no dispute whether it occurred. Additionally, just because circumstances changed making the deal less advantageous is not a viable excuse to wiggle out of a valid settlement.
Prince v Nytschyk Estate, 2016 ONSC 7459 https://www.canlii.org/en/on/onsc/doc/2016/2016onsc7459/2016onsc7459.pdf
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