I don’t usually write about my mediations, in order to protect their confidentiality. But this one is too rich not to share. (Some identifying details have been changed.)

A business dispute resulted in a small claims action that went to mediation through our local Dispute Resolution Center of West Michigan. After each side told their story, which the other disputed, they both cautiously agreed that they’d like to do business again with one another, if possible. Defendant offered plaintiff a small sum, which plaintiff rejected as an insult. We broke to caucus.

P told me in caucus that he wasn’t sure what he wanted, but that little monetary payment wasn’t enough, so I encouraged him to think about what else would make him want to do business again with D. In the caucus with D, she said she would not apologize, and she couldn’t offer much more money, so I encouraged her to think about what else she could offer P to encourage P to do business again with D.

When they resumed their joint session, they did some negotiating. Here’s what they came up with:

• D paid P a small sum
• D will make a small donation to a local charity of P’s choice
• D will provide P with products from D’s business that are some of P’s favorites
• D will hire P’s relative for the summer
• P will meet with D’s colleague to extend forgiveness.

In my introduction, I tell parties that mediation offers an opportunity to come up with creative, unique resolutions tailored specifically to their situation. This case was a perfect example of that. It was win-win-win — not only did the parties both feel that they had “won,” but that local charity wins too!

Michigan’s Court of Appeals decided this week that a mediation agreement was too vague to be enforceable.

It’s not unusual for a mediation to end with a hand-written document that contemplates another document to finally settle the dispute. In fact, it’s fairly common for the mediation of a litigated case, where parties are represented by attorneys, to end with a “memorandum of understanding” outlining the basic agreement and what needs to be done to settle the case and dismiss the lawsuit.

In Control Room Technologies v Waypoint Fiber Network, the mediation of a business dispute ended with a three-page handwritten agreement that began by noting that the parties agreed “in principle to the following, subject to execution of a definitive agreement by the parties.” The agreement went on to describe various aspects of the parties’ contractual relationship going forward, but several items were left “to be determined.” It stated that the parties’ lawsuit would be dismissed “upon execution of [a] definitive agreement.”

A majority of the three-judge panel in the Court of Appeals found this too vague to constitute an enforceable agreement. “To be enforceable, a contract to enter into a future contract must specify all its material and essential terms and leave none to be agreed upon as the result of future negotiations.”

Nonsense, said the dissenting judge, Peter O’Connell. The agreement identifies the parties, the property, and the consideration. All that’s left “to be determined” is the period of time, and courts have traditionally supplied such omissions with a “reasonable” time.

While this is an unpublished case, so binding only on the parties, it gives all mediation participants guidance on mediation agreements. During the tedious agreement-drafting phase at the end of mediation, everyone is tempted to put just the bare minimum in the agreement, and leave the details for another day. This case reminds us that the agreement, to be enforceable, needs to specify the essential elements of a contract, and not leave much “to be determined” at a later, unspecified date.

In my experience, the document these parties drafted at the end of their mediation is not a typical mediation agreement. Usually the missing details pertain to “boilerplate” items like release language. Usually even the hand-written agreement doesn’t say it’s “subject” to “a definitive agreement.” Instead, it typically starts with language to the effect that “the parties have reached the following agreement” and includes how to determine the missing details. Apparently this agreement didn’t say when or how the missing items would be “determined.”

I think as a mediator I might have raised the question here whether these parties intended this document to be enforceable. Maybe this mediator did—and maybe the fact that it doesn’t say anything about its enforceability is a clue that the parties didn’t quite feel like they were there yet. Based on this opinion, we now know that, if parties intend their “in principle” agreement to be enforceable, it needs to contain essential terms and cannot provide for them to be figured out later.

So I think I agree with the majority that this agreement wasn’t enforceable.