Failure of an Agreement - What Happens When the Other Party Backs Out / by Cassandra Hearn

Many divorces or custody cases are finalized through settlement. Mediation and collaborative law are wonderful tools to help settle disputes between spouses and parents. Settlement can help prevent a long and costly final hearing, but only if the parties actually stick to the provisions of the agreement.

After the parties have both signed a divorce settlement agreement, the agreement will be submitted to the trial court for its approval. If before the agreement is submitted, both the parties agree to back out of the settlement, they are free to set aside all or part of the agreement and proceed to trial or even sign a revised settlement agreement. If only one party desires to set the agreement aside, then the issue becomes more complicated.

California Rule of Civil Procedure §664.6 provides that if the parties reach an agreement in writing outside the presence of the judge, then upon motion of either party, the judge may incorporate the agreement into a court order. In any written settlement agreement, it is important that the provisions of this rule is set out clearly. This will make it much more difficult for either party to rescind his or her agreement.

There are some situations under which a party may be able to set aside an agreement even if the agreement conforms with §664.6. However, the requesting party will not be successful if he or she merely has "buyer's remorse." To back out of such an agreement and rescind it entirely, the requesting spouse will need to show that the agreement was entered into in bad faith or there was fraud involved. For example, if one spouse fails to disclose the existence of a retirement account, or lies about his or her intention to immediately relocate with the children, these could be reasons to set aside the agreement.

It is very important that the parties both understand the implications of Family Code §2123. This code section states that a settlement agreement may not be set aside merely because it's unfair or because subsequent events caused the agreement to become unfair. In other words, simply deciding the agreement no longer suits your needs will not be adequate to back out of a signed settlement agreement even if it has not yet become part of a court order.

 Creating a settlement agreement that addresses your needs and is also enforceable requires the help of an experienced attorney. Call us today at 619-800-0384 and let us talk with you about your settlement options