The idea of an oral settlement agreement may seem strange to bidness trial lawyers. It does to Blawgletter, who lives in a state whose court rules ban enforcement of settlements unless the parties write out the terms or recite them on the record in court. Imagine finding that you resolved a billion dollar business case on a phone call. Shades of Pennzoil v. Texaco, which forced Texaco into bankruptcy for mucking up an oral agreement to buy Getty Oil.
Well, friends, it can happen, at least in the Seventh Circuit. That court yesterday affirmed a summary judgment enforcing an oral agreement to settle a race discrimination lawsuit. The court, applying an abuse of discretion standard of review, blew past the parties’ fruitless efforts — immediately after the fateful phone conversation between counsel — hardly pausing to note that lawyers and clients typically expect to finalize the pact in writing before saying calf rope (Texan for we’ve finished). Dillard v. Transcon Int’l Inc., 05-4790 (7th Cir. Apr. 18, 2007) (applying Illinois law).
So watch out, friends and neighbors. Make sure to tell the other side that you don’t have a deal until the parties ink the papers. Barry Barnett