Agreements to Agree are Unenforceable

Posted by William J. Piercy on

Business disputes often arise because amiable parties agree on a few matters, but leave an essential element of their deal to future negotiations by simply agreeing to agree on (often seminal issues) at a future date.  While this may smooth over a contentious issue temporarily, it does not resolve the contentious issue.  If the parties are unable to agree at a future date on how to resolve their issue, they are often rudely surprised to learn that they very well may have no agreement.

Agreements to agree are unenforceable under Georgia law.  Courts may require parties to fulfill their contractual obligations or to pay damages for their failure to do so.  However, the courts will not force parties to abide by contractual terms. It is very common for protracted negotiations to lead to a loose deal reached orally or through the exchange of letters, but which does not address the nuts and bolts of the transaction in detail.  Counsel for the parties then undertake to memorialize the transaction in more formal contracts.  When disputes arise over the proposed language of the proposed contracts, Georgia’s courts are often asked by one side of the transaction to enforce the purported underlying agreement.  The central inquiry in determining whether an enforceable contract exists is whether there was agreement by the parties as to all essential contractual terms, or whether the parties anticipated that there remained additional issues to be ironed out at the time the initial understanding was reached.