## Facts

- Bernard P. Ciaramella, a former employee of Reader’s Digest Association, Inc. (RDA), sued alleging disability discrimination and failure to accommodate under the ADA and New York law, and denial of severance benefits under ERISA.
- Before discovery, the parties negotiated a settlement and reached an “agreement in principle,” after which RDA circulated a written draft settlement agreement.
- Drafts of the settlement included express language that the agreement “shall not become effective” until signed by Ciaramella, RDA, and their attorneys.
- The draft also contained an integration clause stating that no other promises or agreements would be binding unless in writing and signed by the parties.
- The draft required RDA to provide a reference letter and attached a sample letter; Ciaramella found the sample letter unsatisfactory and refused to sign.
- Neither side partially performed: RDA made no payments and Ciaramella did not discontinue the litigation.
- RDA moved to enforce the settlement; the district court enforced it and dismissed the complaint with prejudice despite the absence of signatures.
- Ciaramella appealed.

## Issues

1. Whether the parties intended to be bound to a settlement agreement before it was executed where the draft expressly stated it would not become effective until signed.
2. Whether an oral statement by counsel that “We have a deal” created an enforceable settlement notwithstanding the draft’s signed-writing condition.
3. Whether unresolved terms and lack of partial performance supported a finding that no contract had formed.

## Decision

- The Second Circuit reversed the order enforcing the settlement and the dismissal with prejudice.
- The court held the parties did not intend to be bound until the settlement was signed, and execution was a condition precedent to contract formation.
- The court remanded for further proceedings on the merits of the underlying statutory claims.

## Legal Principles

- Under New York contract law, parties may negotiate toward a deal yet make execution of a written instrument a condition precedent to being bound.
- Courts assess intent to be bound prior to execution using four factors: (1) an express reservation of the right not to be bound absent a signed writing, (2) partial performance, (3) whether all material terms were agreed, and (4) whether the agreement is the type usually committed to writing.
- Explicit “no binding until signed” language and a signed-writing integration clause strongly indicate no binding agreement exists before execution.
- Lack of partial performance and continued litigation weigh against enforcement of an unsigned settlement.
- An attorney’s oral statement signaling agreement does not overcome an express written condition that the settlement is ineffective until executed.

## Conclusion

Because the draft settlement expressly conditioned effectiveness on signatures, negotiations and an oral “deal” statement did not create an enforceable contract; the case was remanded for litigation of the ADA, state-law, and ERISA claims.


Ciaramella v. Reader's Dig. Ass'n, Inc., 131 F.3d 320 (2d Cir. 1997)