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PRELIMINARY STIPS: AGREEMENTS TO AGREE?

Settlement agreements -- or "stipulations" -- reached within the context of litigation are typically viewed as preferred dispute resolution mechanisms, and will not be cast aside absent some significant misunderstanding or irregularity.

If you think you've got at an agreement with someone, it's best to get that understanding documented in a final written form as soon as possible, and not leave any important elements or aspects of the arrangement "open" or unresolved, since problems are likely to ensue.

By way of example, in Split Rock Developers, LLC v. Zartab, Inc. , a tenant ended its subtenant's lease based on the occupant's failure to pay rent for the months of October, November and December 2004. Although the parties had entered into a "so-ordered preliminary stipulation" which provided that the subtenant would vacate the space and pay $5,800 upon execution of a more formalized agreement, when the time came to execute that formal document, the subtenant refused to do so.

When tenant moved the Nassau County District Court to compel the subtenant to perform as originally represented, the District Court vacated the underlying settlement agreement based on "mutual mistake" and directed the parties to proceed to trial on the underlying dispute. On appeal, the Appellate Term, 9th and 10th Judicial Districts, modified the outcome by reinstating the "preliminary agreement" and suggested that the parties could duke out the agreement's enforcement in another forum (like the local Supreme Court).

In its decision, the AT noted as follows:

In our view, the relief sought of compelling tenant to execute the more formal stipulation and the releases is equitable and injunctive in nature, and thus beyond the jurisdiction of the District Court to grant ... Therefore, we sustain the court's denial of landlord's motion to enforce the stipulation on the ground that the court lacked the jurisdiction to grant the relief sought. In so holding, we do not pass on the ultimate issue of whether the so-ordered stipulation is enforceable. We note, however, that, generally, when a contract does not specify a time of performance, a reasonable time is implied ....

That last sentence piqued our curiosity.

If the appellate court had been disinterested in passing upon the agreement's enforceability, then why did it offer a comment on a party's "reasonable time" performance requirement?

And, if the agreement was unenforceable, why would the appellate court bother reinstating it?

(Not to split rock hairs, but this wouldn't be another instance of our courts elevating forum over substance?)

For a copy of the Appellate Term's decision, please use this link: Split Rock Developers, LLC v. Zartab, Inc.

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