From the Rav’s Desk: Retracting from a monetary compromise

1. Question: [Wednesday, 29^th Teves 5781]

Can one retract from a compromise agreement? If I had a dispute with my friend over a certain monetary matter and we agreed to a certain compromise, may one of us later back out of the compromise? Basically, I rented an item to a friend and the item became damaged and we had a dispute regarding who should pay and how much etc. and came to a compromise regarding how much each would pay to replace the item. Now I desire to backout of the agreement which I made under duress because she was unwilling to pay for it at all, and I felt better compromise and make some money than lose it all. But now I’m in a position to retract the compromise and demand her to pay the full amount. May I do so?

Answer:

A compromise agreement is only considered binding on all sides without the ability to retract, if a document of the agreement was signed, or if the sides accepted a Kinyan over the compromise. If neither was done, then either side can choose to back out of the compromise so long as no part of the compromise has yet to take place, and the side that is backing out claims that he felt pressured into the agreement and that it was not done with his complete free will, or that it was done due to misunderstood facts. Thus, in your case that no document was signed and no Kinyan was made and no payments have yet to take place based on the compromise, then one reserves the right to retract from the compromise under a claim that it was done under pressure. To note however that this is not to voice an opinion in your monetary debate with her and the two of you should bring the matter to a Rav to hear both sides and give a ruling.

Explanation: The fact that a compromise agreement reached in front of a Beis Din must be signed or have a Kinyan done in order to make it on retractable, is a clear ruling in the Shulchan Aruch. The question that is asked however is whether this requirement also applies to a compromise agreement reached between two parties outside of a court of law, or perhaps we say that a compromise agreement reached outside of a court of law is always binding even if a document was not signed and a Kinyan was not made, being that it has the status of Mechila which is not require any Kinyan [i.e. if one decides to forgive a loan and tells that to the lender he cannot retract from it anymore]. Practically, while from some Poskim it is implied that one can never retract from an out-of-court compromise agreement even if was done orally without a Kinyan, nonetheless a careful analysis of the Poskim shows that this only applies if the outside of court agreement was done without any pressure and out of goodwill of both sides. If, however, it was done under duress then one may retract from it.

Sources: Michaber C.M. 12:7 and 195:8 based on Sanhedrin 24b rules that a compromise agreement that was reached in court may be retracted from so long as the sides have never signed or accepted a Kinyan over the compromise; Smeh C.M 12:15 and Shach C.M. 12:11 that by Mechila the above law does not apply and one cannot retract even without a signed document or Kinyan being that the forgiveness was done with one’s own free will; Shach C.M. 12:12 based on Mahram Lublin 47 as explained in Avnei Tzedek Seagate C.M. 2 that this law applies only in a court of law being that the sides were forced to the compromise however a compromise agreement that was reached out-of-court may not be retracted from even if documents were never signed and a Kinyan was never made if the compromise was made out of complete goodwill of both sides without any feeling of pressure or duress in which case it is tantamount to each side forgiving even the valid claims of the other side. However, if the compromise was reached under pressure or duress or false claims, then it may be retracted from; See Pischeiy Teshuvah 12 in name of Beis Shmuel 6; Gidulei Teruma 28:4; Shaar Mishpat 12; Mizrach Shemesh 10