Is a Signed Mediation Agreement Enforceable?
Read on to find out whether your signed mediation agreement is actually legally binding and enforceable.
Deciding to go to mediation is a big step for many individuals and businesses. It is a great way to resolve disputes in a timely and cost effective manner. Furthermore, the non-formal environment of a mediation removes the added stresses of the court environment. A range of businesses opt to include provisions relating to mediation in their contracts and agreements, in case disputes arise. After a successful mediation, both parties may decide to enter into a signed mediation agreement. The agreement sets out what the parties have agreed to do, to resolve their differences. So, this poses the question – is your signed mediation agreement actually legally enforceable? Read along to find out.
What is Mediation?
Mediation refers to the process where a neutral third party helps others to resolve their conflicts in a timely, effective and informal manner. In general, mediation is an alternative dispute resolving process to starting legal proceedings. So, instead of initiating proceedings, both parties can sit down, flesh out their problems and come to a resolution.
Importantly, the parties to the mediation control the outcome of the mediation. This is unlike legal proceedings, where the courts impose solutions on the parties. So, if the parties cannot reach an agreement at the end of mediation, then the problem remains unresolved. It is great to remember that a solution reached at mediation can be as creative as you like.
The mediation is overlooked by the ‘mediator’. A mediator is a third party, who has no connection to the parties. The mediator does not have an active role in finding solutions to the parties problems. So, their role is quite different from a judge. The mediator has the role of getting the conversation going, as well as encouraging understanding and assisting both parties to identify their interests and desires.
What is a Mediation Agreement?
If you reach some sort of agreement at mediation, then that is great! More often than not, you would have saved a lot of time and money by doing so. Once there is an agreement between the parties, the mediator will help put this agreement in writing. This is known as the signed mediation agreement or ‘Heads of Agreement‘. Now, there is no set form for a signed mediation agreement, however the agreement should include the following:
- Parties names, including the mediator,
- Time, dates and location of mediation,
- Issue(s) at hand,
- Resolution of issues or points of agreement,
- Parties signatures.
If you do not reach a solution at the end of mediation, don’t worry. Regardless of the outcome, mediation can help make the issues between the parties clearer and more defined. This then allows you to go your own way and focus on alternative methods to solving your issues.
Does Signing the Mediation Agreement Make it Legally Binding?
So, you’ve participated in your mediation and you have come to some amicable agreement or resolution. Your mediator helps write up the agreement. The agreement is in writing and it is signed by yourself and the other party. But is this signed mediation agreement legally enforceable? Will it hold up in court? Unfortunately, this is not a simple yes or no answer – it depends on whether the parties intended it to be legally binding.
So how do we figure this out? An important factor in deciding whether the parties intended that the signed mediation agreement would be binding is their intention. Did they intend the agreement to have legal force? To determine whether this intention exists or not, you must look to the specific words and terms of the agreement.
In general, there are two types of mediation agreements: (1) the ‘good faith’ mediation agreements and (2) the legally binding mediation agreement.
At mediation, you should decide, with the other party, what status you would like your mediation agreement to have.
(1) The ‘Good Faith’ Mediation Agreement
It is common for heads of agreement or signed mediation agreements to use to words “we agree in principle” to signify the non-binding nature of the agreement. Usually, agreements that use this type of wording are “good faith” agreements. They are called good faith agreements because the parties have indicated, by signing the agreement, that they will attempt to keep their word. However, due to their fragile relationship and in the interest of cost and future litigation, they choose to simply rely on the promises made, without enforcing those promises.
(2) The Legally Binding Mediation Agreement
In the alternative, if the words show the intention to be legally binding, the contract will be legally enforceable. A legally binding mediation agreement should expressly state that it is legally binding. If it doesn’t, you may run the risk of accidentally creating a good faith agreement.
So, using the words “the parties intend to be immediately bound” is a great way to ensure your signed mediation agreement is binding. Usually, if parties do intend to be bound by their mediation agreement, the agreement works as a contractual obligation to apply to the Court for formal enforceability or a Court Order.
If you are seeking to enforce your signed mediation agreement in this way, it’s best to speak to a mediation solicitor.
Mediation is a great way to efficiently resolve conflicts you are having with another party. If you successful reach an agreement after your mediation, it is always best to place that agreement in writing. However, just because your mediation agreement is in writing, does not automatically mean your agreement is legally enforceable. Take care in the words you use in your agreement. If you’re considering writing up a mediation agreement, use very precise language and expressly state whether it is an agreement in principle or is immediately binding. It’s best to seek the advice of a solicitor if you are intending to create a legally binding mediation agreement.
Mai is a Digital Marketing Coordinator at Lawpath, working as part of the Content Team. She is in her final year of a Bachelor of Laws degree at the University of Wollongong. She is interested in Business Law and Employment Law.