You might think that the second you sign a general release, agreeing to accept a certain sum of money in exchange for discontinuing your claim that your case would be considered "settled."

But you'd be wrong.

Under New York law, your case isn't considered settled until that executed settlement agreement is actually sent to the defendants' representatives, whether their attorneys or their insurers. To that end, New York's courts, relying upon principles of contract law, summarized this rule as follows:

"[A] general release is governed by principles of contract law" (Mangini v. McClurg, 24 NY2d 556, 562 [1969]). In fact, this rule goes back to the 1800s, as the seminal case on this issue was rendered by New York State's highest court in White v. Corlies (46 NY 467, 469-470 [1871]).

"[I]t is essential in any bilateral contract that the fact of acceptance be communicated to the offeror" (Agricultural Ins. Co. v. Matthews, 301 AD2d 257, 259 [1st Dept 2002]; see also D'Agostino Gen. Contrs. v. Steve Gen. Contr., 267 AD2d 1059 [4th Dept 1999]; Church of God of Prospect Plaza v. Fourth Church of Christ, Scientist of Brooklyn, 76 AD2d 712, 714 [2nd Dept 1980], affd 54 NY2d 742 [1981])."

A practical consequence to this rule is this: if a plaintiff signs the general release, but the release is never tendered to the defendants' representatives, the plaintiff would, technically speaking, not be bound by the settlement. The converse (in theory) would also hold true, however: depsite having previously agreed to the settlement, the defendants would not be bound to pay the settlement until they receive the signed settlement papers from the plaintiff.

Jonathan Cooper
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Non-Compete, Trade Secret and School Negligence Lawyer