A Settlement Agreement is a Contract To Be Resolved Under New Jersey Contract Law; New Jersey Public Policy and Law Favor Enforcement of Settlement Agreements.
Thomas W. Hartmann
The Hartmann Law Firm LLC; 908 769 6888
A Settlement is a Contract. The construction and enforcement of settlement agreements are governed by the principles of New Jersey contract law. Under New Jersey law, a settlement agreement between parties to a lawsuit is a contract separate and independent from the underlying dispute.
Public Policy Favors Settlement. New Jersey public policy strongly favors settlements of litigation. When faced with evidence of an intended settlement agreement, New Jersey courts exhibit a bias in favor of finding an enforceable settlement contract. Again, the courts revert to contract analysis.
What to Look For. The basic elements of contract formation in New Jersey are: (a) competent parties; (b) proper legal subject matter; (c) valid consideration; (d) mutuality of agreement (offer and acceptance); and (e) mutuality of obligation. The courts look to see if these items are present in a purported settlement.
A meeting of the minds among the parties must be present at the time of contract formation. A “meeting of the minds” exists when the parties agree to the same thing in the same sense. To have a meeting of the minds both parties must understand what each is agreeing to do. The contract cannot be based upon a secret intention. But, the court will apply common sense to the communication between the parties and draw reasonable conclusions about what the words meant objectively.
An offer is a communication that creates a power of acceptance in the offeree. It is the indication of a willingness to enter into a bargain, in a way that would reasonably justify another person in understanding that his agreement will make a deal. In other words, if you offer something and the other person say “OK,” that may be the settlement.
New Jersey examines the objective manifestation of intent of the parties. As the courts have said: “A contracting party is bound by the apparent intention he or she outwardly manifests to the other party.”
An acceptance occurs when there is a communicated assent to the terms of the offer in the manner stated in the offer.
In short, a settlement is a contract -- and one that New Jersey courts bend over to enforce where possible so that the dispute that has led to the settlement can be cleared away and resolved.
The Hartmann Law Firm LLC can assist in these compliance matters to insure your business and your assets are protected. Beyond this, we can help guide businesses through issues ahead of litigation or aggressively advocate in litigation and business disputes should the need arise.