The Dangers of Ambiguities in Negotiating Settlement Agreements

May 28, 2014
Chapman Sidebar

A defaulting borrower and its guarantors, owing millions of dollars, claim that a series of emails sent to the lender’s attorney constitutes a legally binding settlement agreement to modify the loan agreement and to settle the matter for pennies on the dollar. This was not the lender’s intent. The lender merely intended to explore terms on which the parties might agree to resolve the default, while the lender investigated the guarantors’ financial condition. If the borrower or guarantors file a lawsuit to enforce the proffered terms, is the lender bound by the terms set forth in the emails?

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