On the other hand, liquidated damage provisions of contracts may not be used primarily for the purpose of imposing punishment for any breach. For an example of a permissible liquidated damage clause using the facts of the previous case, the jewelry company could have included a liquidated damage clause requiring the mining company to compensate the jewelry company for the amount of money actually lost by virtue of losing the benefit of the 10% discount based on the market price of gold for the remainder of the contract term. Conversely, the jewelry company could not have included a liquidated damage clause specifying one-million dollars in damages for any breach of contract by the mining company.

Settlement Negotiations:

It is common practice for parties to litigation to exchange mutual releases of liability. This protects them from any future liability arising from arguments that certain circumstances were not covered by the settlement agreement. This is standard practice to ensure that the settlement agreement terminates any ongoing disputes between the parties arising from the original subject of litigation.

In some situations, oral settlement agreements may be enforced despite the absence of any writing between the parties and even where one (or both) parties specifically refuse to sign a writing based on oral agreements. Typically, those situations arise where the parties agree to settle during a settlement conference mediated by a judge or where the parties represent...

Nevertheless, without sufficient specificity as to the precise terms of the settlement or with respect to whether or not a formal offer was made and accepted, an oral settlement agreement would probably not be recognized.
The fact that FSI's attorney used the phrase "FSI accepts your settlement offer" would suggest both that a valid offer was tendered and that it was accepted. Since the settlement terms were specific enough to constitute a valid offer, FSI's acceptance created a binding agreement. If I were the judge, I would give FSI the opportunity to identify any specific term of the agreement upon which its refusal is based. If FSI can identify a specific term of disagreement (or deviation from the subject of the e-mail exchanges between the attorneys) that justifies its refusal to accept such a term exists, I would require the parties to negotiate on that specific term only. Otherwise, I would enforce the settlement agreement based on the language and intent of the parties reflected in the e-mail chain.

References

Halbert, T., and Ingulli, E. (2007). Law & Ethics in the Business Environment.

Cincinnati, OH: West.