What are Stipulation Agreements?
Stipulation agreements, typically referred to as stipulations, are a cornerstone of contract law, as they summarize the resolution of a conflict between two parties. A stipulation is a contract that is embedded into a court record, and is a legally binding contract without the necessity of going through the entire process of a formal trial before a judge. Every stipulation must be approved by the judge handling your case, and, when signed by both parties, becomes an order enforceable by the court system.
A stipulation is a contract in which all parties involved agree to a specified outcome without going to trial. Stipulations apply to every area of the law, and are not limited to the family courts . For example, a stipulation can be used in a bankruptcy case. Speaking strictly about family law, stipulations might be used in divorce cases to determine how property should be divided, who retains custody of children, or how property should be removed from the marital home. Because a stipulation is an agreement, the judge will not review the case until a stipulation has been reached between the parties, as summary judgments are made.
In simplest terms, a stipulation is a contract, and it requires all parties to comply with its terms. If a compliance order is not followed, the parties can petition the court for modification or enforcement.
The Function of Stipulation Agreements
Over the years, the firm has written a number of posts related to the enforcement of stipulation agreements entered into on behalf of community associations. As a result, many people have questions about what a stipulation is, what courts will enforce them, and whether or not it can all be undone. A stipulation agreement is an important legal tool used to formalize an agreement between parties. Generally, stipulations are a written compromise between the parties, usually entered into in connection with pending litigation referred to as a "consent decree." Consent decrees have been defined as "an agreement, approved and entered by a judge, that resolves a lawsuit in which a plaintiff has alleged a violation of a right." Another way to put it, is that the stipulation agreement provides a basis for a trial court to accept and enter an order or judgment without requiring a full court hearing or trial on the merits of the case. As a result, the stipulation agreement can save the parties—and the court—time and expense.
Stipulation agreements are typically used by associations in connection with litigation, but not exclusively. For example, the Florida Department of Business and Professional Regulation (DBPR) has issued stipulation agreements related to DBPR complaints against licensees. The stipulation that the DBPR enters into with a licensee "is intended to be a settlement of any factual or legal claims that have been made or could be made by DBPR under the statute, rule or ordinance which aggrieves or might aggrieve the licensee…" (See Florida Administrative Code 61-35.010, Stipulated Findings and Order.)
Types of Stipulation Agreements
Stipulation agreements come in many different forms. There are stipulation agreements in civil cases, family law cases, and settlements between business persons. The provisions and/or the terms of these stipulation agreements vary, depending upon the type of case involved.
- Civil Case Stipulation Agreement: A civil case stipulation agreement is an agreement that involves the constitutional right to a trial. In California, for example, there are several rules concerning civil case stipulation agreements. California Code of Civil Procedure, § 581 provides as follows: "(a) A trial or proceeding by jury may be waived entirely or trial by jury as to any one or more issues in the case may be waived by stipulation of the parties confirmed by the court. (b) Failure to affirmatively request a jury, whether by a party’s express consent to a court imposed trial date or otherwise, waives the jury for all purposes, including in actions triable of right by jury." See also Cal. Code Civ. Proc., §§ 581 et. seq. (providing for dismissal of actions by stipulation of the parties). While particular stipulation agreements, such as those between insurers and insureds involving third parties may not appear to require confirmation by a court, under the broad "all contract" provisions of the California Civil Code, they do, in fact, require confirmation to be valid.
- Spousal and Child Support Stipulation Agreements: When resolving issues regarding child support and spousal support, the parties must be aware of one important fact: Any stipulation agreement made between the parties which alters the child support or spousal support award set forth in the court’s Findings and Order After Hearing is unenforceable if it is not approved by the court, even if it is signed by both parties. See In Re Marriage of Khaw & Rahbaran, 2012 WL 2708576. This is true even when the support provisions in the stipulation agreement are more generous to the wife than the court is.
- Tort Stipulation Agreements: When settling a tort claim with an insurer, the following provisions may be included in the release: assumption of liability for indemnity, no admission of liability, waiver of right to recovery of consequential damages, waiver of insurer rights to subrogation, waiver of my right to recover from other insurers, waiver of my right to require other insurers to defend and indemnify, waiver of right to contribution from other insurers, waiver of right to recover from other insureds, and acknowledgement that the insurer’s policy limits have been exhausted by the settlement. See Rose v. North American (A Florida corp.), 34 Cal. App. 4th 756, 760 (1995). These provisions are enforceable when they have been approved by the adjudicating court.
Requirements and Elements of a Legal Stipulation Agreement
Each state has its own statutes and case law determining what constitutes a valid stipulation. However, there are fundamental considerations that are universally applicable. In order for a stipulation to be valid and enforceable, there must be an agreement as to the settlement. The stipulation itself must be sufficiently definite, specifically stating the terms of the agreement. If the agreement is unclear in anyway, it can be thrown out. There must also be consideration, or a mutual exchange of something of value between the parties. There must be trust and confidence between the parties where the stipulation was agreed upon and executed voluntarily. Finally, stipulations must be in writing, dated, and signed by the parties to the agreement. Assuming the required components are present, a stipulation could become a binding and enforceable contract. This means that it is a settled or agreed upon dispute that can be enforced; instead of having to litigate the terms of the stipulation.
Forming a Stipulation Agreement
The process of creating a Stipulation Agreement often begins with parties engaging in a negotiation period to discuss which issues they can agree upon. As each party presents what terms they can agree and disagree upon, it is important to make a record of all issues discussed so that an eventual Stipulation Agreement can encompass all of the statutory or legal requirements, terms and conditions which have been agreed upon between the parties. Sometimes a Stipulation Agreement is entered into in the form of a handwritten document, by both parties. However, although in some cases, this can be a legally binding agreement, it may not contain all of the information that is required by the Court. Likewise, it is also important to make sure that all parties have signed the Stipulation Agreement. For example, if it is a Stipulation Agreement for the custody of minor children, then all parents or fathers that a child may have or who have filed a petition with the Court must be a party to the Stipulation Agreement. Furthermore parents who are not listed on the birth certificate of a child and have not taken steps to assert their rights under the law relating to custody of minor children are also required to sign the Stipulation Agreement or give permission to the custodian parent to enter into the Stipulation Agreement that is intended to bind all parties. Once a Stipulation Agreement is created between the parties, they will usually schedule a hearing with the Court and file a brief which consists of the Stipulation Agreement and a supporting Affidavit. A Judge may then sign the Stipulation Agreement and enter a Court Order. The Court will generally accept the Stipulation Agreement, however, it is important for the parties to make sure that the Agreement is entered in proper form with requirements set forth by the Court, so that there are no delay in having the Agreement/Order entered by the Court.
Advantages and Limitations
Stipulation agreements can provide clients with a valuable means of protecting their interests. For instance, they can help narrow the issues in dispute in child custody cases, reducing the amount of time and expense involved in proceedings substantially. If both parties to the divorce agree to the effect a relocation would have on child custody, the courts will often uphold that agreement without regard to the statute or case precedent. Similarly, any agreement on the amount of child support to be paid can help reduce the time and expense required for litigation.
Stipulation agreements can also be used to effectively and conclusively resolve disputes over property distribution in divorce matters and protect assets and liabilities for the parties. While there is significant room for negotiation, or even deceit, when such an agreement is not disclosed to the court, it does represent a valid and permanent means of resolving the dispute.
However, stipulation agreements do come with several drawbacks . For one, if the agreement is found not to have been made in the best interests of children involved, it can be set aside by the courts. Thus, while parties can avoid conflict over child custody by entering into an agreement, they cannot escape the scrutiny of the courts entirely in doing so. Child support agreements, though, when entered under the law and regardless of their wisdom, generally will be upheld.
Further, once signed, by all parties and filed with the court, stipulation agreements usually can only be amended or set aside by another agreement between the parties, by consent of the court or by showing of fraud, duress, justifiable ignorance, mutual mistake of material fact or lack of capacity. Thus, while an agreement can be a valid and effective means of resolving a dispute, it can also be risky. Having the advice of counsel can go a long way toward ensuring that signing the agreement is not a mistake that can come back to haunt the party down the road.
Breach and Enforcement Issues
An enforcement application in court on the grounds that the other party has failed to honour the terms of the stipulation agreement can be successful. The court has specific powers to enforce the terms of the stipulation agreement and can give orders that will give effect to the agreement.
If the issue involves the right of contact with children, it may also be that the right of contact has to be dealt with, as must be in the best interests of the child. In the case of Baartman v Baartman 1998 (4) SA 853 AAC the minor child was transferred from the custody of her maternal grandparents to her mother in accordance with a stipulation agreement. The child maintained a good relationship with her grandparents and it would not have been in her best interests to deny her contact with them. For that reason the Grandmother was given final custody of the child.
Breaching the terms of a stipulation agreement – particularly if it concerns the welfare of children – will cause the person who has breached that agreement to lose the respect of the court. Once the parties reach an agreement and it has been signed it is not the private affair of the parties as contemplated above. It is a legal document which is subject to the normal legal consequences of a breach. The law is that an agreement is an enforceable contract between the signatories if it contains all of the essential requirements of any agreement, namely: An offer; acceptance of the offer; certainty; and compliance with law. In other words, as with normal contracts, if one party doesn’t comply with the terms of the stipulation agreement, the other party will be entitled to approach the court for a remedy by way of court order. The order might be a simple order compelling the other party to comply with the terms of the agreement or an order limiting his or her rights. There are various other remedies but these are best discussed with your lawyer.
This means that the terms of the stipulation agreement cannot be ignored without consequence. It will be necessary to comply with its provisions by first adhering to the time frames agreed to. In fact the complier will be urged to err on the side of caution and apply for an extension of time rather than ignore a time limit.
Real-World Illustrations
Courts and administrative agencies regularly make use of stipulation agreements to settle disputes. For example, consider Young v. Housing Authority of the City of Baton Rouge, 803 F.2d 505 (5th Cir. 1986). In Young, plaintiff challenged a local authority’s housing regulations that they contended denied equal housing opportunities to families with children. The district court concluded that the defendant’s apartment complex violated federal statutes barring discrimination in the provision of housing services and entering into a settlement agreement with the defendants. After monitoring its compliance with the settlement agreement, the district court awarded attorney’s fees to plaintiff’s attorney. The Fifth Circuit reversed for failure to plead an amount at issue. The litigants abided by the stipulation agreement but the court has wide discretion in determining the sufficiency of pleadings.
As a second example, in People v. Cochnar, 4 Cal. App. 5th 405 (Cal. Ct. App. 2016), the Court of Appeal overruled a defendant’s First Amendment challenge to an employment stipulation agreement, finding it to be a lawful condition of employment. The agreement required the defendant to refrain from discussing alleged wrongdoing, such as the identity of confidential informants, on social media or with the media. The Court held that the defendant did not have a constitutional right to free speech when he testified to allegations of misconduct under oath and signed a lawful employment contract.
Myths and Facts
While stipulation agreements can be immensely helpful tools, they tend to be surrounded by many misconceptions. Unfortunately, many of these misconceptions are not true, and it is easy to see how they might turn away someone from a useful legal tool. One misconception is that a stipulation agreement is a guilty plea. This is absolutely not true; the accused does not plead guilty to any crime in a stipulation agreement. Another common misconception is that a stipulation agreement cannot include the charge of driving after suspend . This too, is untrue. With the right circumstances, the terms of a stipulation agreement could include a dismissal of the charge of operating after suspend. Another misconception commonly heard is that a stipulation agreement cannot reduce drug or theft charges. Much like the previous misconception, though, this is again not true. While not every offense is eligible for a reduction, it is definitely worth inquiring about the possibility.
