Enforcing a Binding Mediated Agreement

If an agreement is reached between parties at ENE or Mediation, it is advisable to get the document in writing and signed off on by the parties to prevent either party from changing their mind.

In the event that the parties sign a binding mediated agreement and then one party tries to rescind or back out, the attorney can ask the court to enforce the binding mediated agreement.

The information below is taken almost exclusively out of an order we received from the Court in a case where Elizabeth motioned to enforce the mediation agreement and was successful. The full order can be found at the bottom of this article.

Defining a Valid Signed Mediated Agreement

“[A] compromise and settlement of a lawsuit is contractual in nature and [an] enforceable settlement requires offer and acceptance so as to constitute a meeting of minds on the essential terms of the agreement.” Ryan v. Ryan, 193 N.W.2d 295, 297 (Minn. 1971).

Burden / Requirements to Invalidate a Signed Mediation Agreement

Generally Speaking

Generally, a stipulation of the parties represents their voluntary acquiescence in an equitable settlement, and the district court should “carefully and only reluctantly” alter its terms. O’Donnell v. O’Donnell, 678 N.W.2d 471, 475 (Minn. Ct. App. 2004).

The party “seeking to have a compromise settlement defeated must bear the burden of proof of demonstrating the agreement’s vulnerability.” Id. Where “no fraud or bad faith has been established,” it is an “abuse of discretion” for the court to vacate a settlement contract. Id.

A stipulation may be vacated, however, if it “was improvidently made and in equity and in good conscience ought not to stand.” John v. John, 322 N.W.2d 347, 348 (Minn. 1982) (quoting Levine v. Holdahl-Colstad, Inc. 88 N.W.2d 865, 868 (Minn. 1958)).

Fraudulent or Material Misrepresentation

“A contract is voidable if a party’s assent is induced by either a fraudulent or a material misrepresentation by the other party, and is an assertion on which the recipient is justified in relying.” Carpenter v. Vreeman, 409 N.W.2d 258, 260–61 (Minn. Ct. App. 1987), citing Restatement (Second) of Contracts § 164(1). “In order that a
misrepresentation be fraudulent within the meaning of this Section, it must not only be consciously false but must also be intended to mislead another.” Restatement (Second) of Contracts § 164(1), comment (a). “[A] nonfraudulent misrepresentation will not entitle [a party] to relief unless it is material.” Id., comment (c). A misrepresentation is material if it “would be likely to induce a reasonable person to manifest his assent” or if the maker knows or has reason to know it will induce assent in a particular individual. Id.

Mutual Mistake of Fact

Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bars the risk of mistake[.]” Restatement (Second) of Contracts § 152(1). “Relief is only appropriate in situations where a mistake of both parties has such a material effect on the agreed exchange of performances as to upset the very basis for the contract.” Id., comment (a).
The Restatement continues:
A party cannot avoid a contract merely because both parties were mistaken as to a basic assumption on which it was made. He must, in addition, show that the mistake has a material effect on the agreed
exchange of performances. It is not enough for him to prove that he would not have made the contract had it not been for the mistake. He must show that the resulting imbalance in the agreed exchange is so
severe that he can not fairly be required to carry it out. Ordinarily he will be able to do this by showing that the exchange is not only less desirable to him but is also more advantageous to the other party. Sometimes this is so because the adversely affected party will give, and the other party will receive, something more than they supposed. Sometimes it is so because the other party will give, and the adversely affected party will receive, something less than they supposed. In such cases the materiality of the effect on the agreed exchange will be determined by the overall impact on both parties. Restatement (Second) of Contracts § 152(1), comment (c).