Orlofsky ADR Services

Securing Binding Mediation Agreements in a Virtual World

It is critical, at the end of a successful mediation, to secure a binding agreement to the material terms of the settlement, even if the parties intend to later draft a more formal document. This is typically done by having the parties agree to a settlement term sheet. What you want to avoid is creating any delay in making this term sheet binding, because any delay gives a chance for a party to experience buyer’s remorse and try to back out of the deal.

Securing agreement to the term sheet at the end of a virtual mediation can be tricky unless the parties have an electronic signature program such as DocuSign ready to go. Even emailing a document to each side to print out, scan, and return can create a delay that could unsettle the agreement.

A simple method that I’ve used is where the mediator emails the agreement to both sides and simply asks for a response to that email confirming agreement. This creates a written record of agreement, and can be done while the mediation session is still going on, thereby eliminating any delay in getting a binding agreement.

But is this email system binding? In Overfield v. Starbucks Corp. (D. Kan. 2020), even though there was an in-person mediation, rather than have the agreement signed then and there, the mediator emailed the document to both sides about an hour later, to which both parties responded “Yes, agreed.” The court found this agreement binding. So, emailing an agreement to both sides, and requesting a response indicating their agreement, should be a viable and quick way of securing a binding contract.