F. The Binding Agreement to Negotiate Over Nonbinding Terms

• Library: Crafting Effective Settlement Agreements: A Guidebook for Attorneys and Mediators (ABA) (2018 Ed.)

F. The Binding Agreement to Negotiate Over Nonbinding Terms

It saves weeks to months of delay and significant expense if at least a memorandum of agreement can be signed by the close of the mediation. It is almost always easier to get a signature at the time of the mediation than later.

— Bette J. Roth et al.⁵⁸

A preliminary agreement does not have to be entirely binding or completely nonbinding; sometimes parties can enter into hybrid agreements containing both binding and nonbinding terms. Parties who want to maximize the odds of reaching a settlement, but do not want to be prematurely bound to any particular terms of the settlement, may choose to assume a duty to negotiate in good faith, but declare nonbinding all terms of the settlement agreement before a final written agreement is signed.⁵⁹ It is important to note the fundamental difference between an agreement to negotiate and an agreement to agree, i.e., a commitment to formulate and enter a binding final agreement. Generally, agreements to agree are not enforceable. Even contracts labeled "agreement to agree" "do not commit the parties to reach their ultimate contractual objective," but only to negotiate in good faith.⁶⁰

An agreement to negotiate "buys a party an assurance that the transaction will falter only over a genuine disagreement, thus allowing a party strapped for time or money to go ahead with arrangements with a sufficient degree of confidence in the outcome."⁶¹ An agreement to negotiate may serve the purposes of committing the parties to a particular process (such as mediation) for a specific amount of time, and preserving confidentiality of the negotiations or mediation (which might be especially important in venues (such as federal courts) where no mediation privilege is supplied by statute or rule of court). If the agreement to negotiate is entered into before filing of the lawsuit, a tolling provision may give the parties time to explore settlement without the expense of legal pleadings.

AGREEMENT TO NEGOTIATE

This agreement to negotiate is made between Teddy Miyoshi (Miyoshi), a minor, through Sandra Wrente (Wrente), his guardian ad litem, and Kyle Statena (Statena), an individual, to facilitate negotiation of a mutually acceptable settlement agreement in Miyoshi v. Statena, Miami-Dade Circuit Court No. 13-15689 CA 07 (the action).

1. Good faith negotiations. Wrente, on behalf of Miyoshi, and Statena agree to negotiate in good faith starting on March 1, 2017, and continuing for the...