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That a settlement agreement is oral, instead of written, is of no consequence

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March 16, 2013 at 3:59 pm

Law Lessons from GRAND CENTRAL PROPERTIES, LLC VS. SUDLER TINTON FALLS, LP, ET AL., App. Div., A-4195-11T1, March 11, 2013:

It is well-settled that a settlement of a legal claim between parties is a contract like any other contract. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). Interpretation and construction of a contract is a matter of law for the trial court, subject to de novo review on appeal. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). When construing a contract, its terms must be given their “plain and ordinary meaning” and the agreement must be interpreted as a whole. Nester v. O’Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997).

That a settlement agreement is oral, instead of written, is of no consequence. Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983). “Where the parties agree upon the essential terms of a settlement, so that the mechanics can be ‘fleshed out’ in a writing to be thereafter executed, the settlement will be enforced” even if the promised writing is not thereafter provided. Lahue v. Pio Costa, 263 N.J. Super. 575, 596 (App. Div.), certif. denied, 134 N.J. 477 (1993).

“[W]here the terms of a contract are clear and unambiguous there is no room for interpretation or construction and the courts must enforce those terms as written.” Karl’s Sales and Service, Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 493 (App. Div.), certif. denied, 127 N.J. 548 (1991). The court has no right “to rewrite the contract merely because one might conclude that it might well have been functionally desirable to draft it differently.” Ibid. Nor may the court make a better contract for the parties than they have seen fit to make, or to alter it for the benefit of one party or the other. Ibid.

At the same time, however, “if the agreement is silent as to a circumstance which thereafter arises, the parties may not be left without an agreement. So long as the parties intended to be bound by their agreement and a court is able to fill any gaps necessary to achieve a fair and just result, the contract may be modified by the addition of reasonable terms.” Aarvig v. Aarvig, 248 N.J. Super. 181, 186 (Law Div. 1991). Before supplying a “missing contract term,” however, the court must determine whether “the parties had contemplated the existing situation when the agreement was formed.” Ibid. If they did not, the court may supply the omitted term. Sachau v. Sachau, 206 N.J. 1, 9 (2011)(citing Restatement (Second) of Contracts ยง204(b)(1981)). However, if the parties had contemplated the situation under review and had nevertheless finalized their settlement, a court may not rewrite or amend the contract to include a new term. Karl’s Sales, supra, 249 N.J. Super. at 493.

“On a disputed motion to enforce a settlement, as on a motion for summary judgment, a hearing is to be held to establish the facts unless the available competent evidence, considered in a light most favorable to the non-moving party, is insufficient to permit the judge, as a rational factfinder, to resolve the disputed factual issues in favor of the non-moving party.” Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 474-75 (1997).

NOTE from Paul G. Kostro, Esq.: If you are interested in Mediation; or have issues relating to Divorce, Domestic Violence, Child Support or Other Legal Matters, please call me to schedule an appointment — I can be reached by telephone at (908)486-2200; or by Email.


NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, separation agreements, palimony, PSA, property settlement agreement, premarital and prenuptial agreements, midmarriage and marital agreements.

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