Then the fax arrives. As the paper streams out of the fax machine, the attorney sees the dollar figure, but it has now become immersed in a sea of words. Clause after clause emerges from the fax machine. That is, after all, a good question. The first quandary for the bleary-eyed attorney is to determine exactly what was accomplished last night.
Settlement agreements are essentially contracts and are governed by the law of contracts.
Therefore, contract law will be used to determine if an agreement was actually reached and the legal effect of the paper streaming from the fax machine. As a form of contract, a settlement agreement must include the essential elements of a contract, including competent parties, a proper subject matter, legal consideration, mutual agreement, and mutual obligation. It is relatively easy to meet the minimum requirements for a valid and enforceable contract. The difficulty begins when it is time to actually follow through on the terms of the contract. The Statute of Frauds Settlement agreements need not always be in writing to be effective.