Are Negotiations Over When You Verbally Agree to a Settlement?

Bill Allen | May 14, 2024 | Personal Injury

Are Negotiations Over When You Verbally Agree to a Settlement?

Is it possible to get out of a verbal settlement agreement? There is no “yes” or “no” answer to this question that applies under every circumstance. 

The general answer is that verbal agreements are legally binding (meaning you can’t back out) as long as:

  • They don’t violate the State of Frauds, and
  • You can prove the existence of the agreement and certain basic facts with reasonable certainty.

Let your lawyer review any settlement agreement you’d like to back out of.

The Formation of a Binding Agreement: Offer, Acceptance, and Consideration

The question of whether a settlement agreement is binding depends on whether you formed a binding contract in the first place. 

To form a binding contract (even a verbal agreement), you need all of the following three elements to be present:

  • One party communicated a valid offer to you.
  • You accepted the offer on the same terms, with no modifications.
  • Your agreement includes “consideration.”  

Consideration means each party offered something of value so that the agreement is not a gift from one party to another. In a personal injury settlement agreement, for example, the defendant might offer a $45,000 settlement. In exchange, you agree to forever abandon the personal injury claim you two were fighting over. So, the defendant offers a promise to pay $45,000, and you offer a promise to forever abandon your claim or lawsuit. An exchange of promises can form a perfectly valid contract.

What You Have to Prove to Render a Verbal Contract Enforceable

It’s only a bit of an overstatement to say that, in law, nothing is true unless you can prove it. 

To render a verbal settlement agreement, you must prove:

  • The identity of the parties, including you and whoever is responsible for paying your claim
  • Offer, acceptance, and consideration 
  • The amount of the settlement ($45,000 in our example)
  • The terms of payment, including whether it is a lump sum, structured settlement, etc.
  • The specific claim(s) you are abandoning under the settlement agreement
  • Intent to be bound. In other words, the “agreement” was a contract, not a “memorandum of understanding” or something similar.
  • Any other critical terms, a confidentiality clause, for example

You must prove all of these terms to enforce the verbal contract.  

The Florida Statute of Frauds

The Statute of Frauds prevents the enforcement of any agreement that you did not put into writing. Even if you put the agreement into writing, if it is within the scope of the Statute of Frauds, a court will not enforce it if the party against whom it is being enforced did not sign it. 

Normally, personal injury settlements do not fall within the scope of the Florida Statute of Frauds. One counterexample would be a structured settlement task that could not, consistent with its own terms, be performed within one year. You might not be able to enforce such a settlement agreement unless you put it into writing and the obligor signed it.

Another more remote possibility is a term obligating the insurance company to transfer real estate into your name rather than cash into your bank account. This sort of arrangement is unusual in personal injury settlement agreements.

What if the Insurance Company Tries to Rescind a Settlement Offer? 

That depends. Did you accept the offer before they rescinded it? Without a valid acceptance, you have no contract and no settlement.

The insurance company can no longer rescind an offer that was accepted unless there has been a serious misunderstanding (meaning there was never a genuine “meeting of the minds” concerning the terms of settlement).

What Is the Process for Accepting a Settlement Offer? 

Despite the theoretical validity of most verbal agreements, it’s definitely best to accept an insurance company’s settlement offer in writing and insist on a final, written settlement agreement that you both sign. Your acceptance should exactly mirror the terms of the offer. If it deviates in any way, it is a counteroffer, not an acceptance. So, if you don’t like the terms of the insurance company’s offer, issue a counteroffer and keep negotiating.

A Lawyer Can Help You Reach a Settlement Agreement 

Don’t worry–your lawyer can’t settle your claim with an insurance adjuster (or anyone else) without your permission. But yes, you can authorize your lawyer to settle your case for you. If you’re going to go that route, delegate your authority to settle to your lawyer in writing and be specific. In any case, you definitely need a lawyer when you’re negotiating a personal injury settlement with an insurance company.

Contact Our Ocala Personal Injury Law Firm in North Central Florida

If you need legal assistance, contact the Ocala personal injury lawyers at Allen Law Accident & Injury Lawyers at your nearest location to schedule a free consultation today.

We have three convenient locations in North Central Florida:

Allen Law Accident & Injury Lawyers – Ocala Office
112 S Pine Ave
Ocala, FL 34471
(352) 351-3258

Allen Law Accident & Injury Lawyers- Downtown Gainesville
621 W University Ave
Gainesville, FL 32601
(866) 928-6292

Allen Law Accident & Injury Lawyers – Gainesville office
2550 SW 76th St #150
Gainesville, FL 32608
(877) 255-3652