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Let's say there is a settlement agreement states that Party A (Plaintiff) will agree to settle the debt if Party B (Defendant) makes down payment by a certain MONTH and DAY--with the rest of the debt spread out in monthly installments over two years.

In exchange for signing the settlement agreement, Party A (Plaintiff) will dismiss the case WITHOUT prejudice. If Party B (Defendant) defaults on the agreement, the credit card company can submit an affidavit of non-compliance which results in a judgment against Party B (Defendant).

However, the settlement agreement only specifies a MONTH and DAY for the downpayment DUE DATE and NOT a YEAR.

The question is, if the agreement gets signed by both parties, and Party B (Defendant) decides not to make the downpayment, does that constitute a breach of contract?

Since there is no downpayment due-date YEAR (only MONTH and DAY), how would a court rule if the credit card company were to file an affidavit of non-compliance?

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  • What month and date is specified?
    – user6726
    Jul 30 at 19:41
  • do you have a particular jurisdiction in mind? Jul 30 at 19:48
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This would be a case of mutual mistake or unintentinal ambiguity. If the circumstances make it clear what year the parties intended, particularly if it is the current year, a court would probably treat the contract as if it specified that year.

If the parties' intentions could not be reasonably determined, a court might rule that there had been no meeting of minds, and so no valid contract at all.

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Such a minor defect would not render an agreement unenforceable. The courts would decide how to resolve this based on the most probable intended year. Suppose for example that the agreement is signed on July 15 2021, and the date for the down payment is February 15: it is unreasonable to assume that the intended year was 2021. Suppose the monthly payments have an explicit starting date of March 30 2022: it is reasonable to assume that the intended year is 2022. If the monthly payments are due "and every month thereafter", there is less information available in the agreement. If both 2021 and 2022 are reasonable years given all of the evidence, there was no agreement to begin with.

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if the agreement gets signed by both parties, and Party B (Defendant) decides not to make the downpayment, does that constitute a breach of contract?

Yes, or under some circumstances it would be tantamount to rescinding the settlement agreement.

First, extrinsic evidence is generally likelier to reflect that the parties' understanding was the closest date with that month and day than that of any subsequent year.

Second, the commonplace and statutory meanings of "downpayment" denote an initial disbursement. See Nichols v. Century West, LLC, Cal.App.5th 604, 612 (2016) ("'Downpayment' means a payment [...] at or prior to delivery [of the benefit or consideration]", citations omitted, emphasis added). This implies prior to the monthly installments during the two-year period. In some contexts, the notion of "initial" may stretch as in "any portion of the downpayment [...] deferred until not later than the due date of the second otherwise scheduled payment", Id.

Third, your description is unclear as to when the dismissal took or would take place, and whether the year to that effect was specified in the agreement. If dismissal year was specified in the agreement, then the notion that the intended year of downpayment was a different one seems devoid of support. Else (i.e., the year for dismissal was left unspecified in the agreement), the matter would warrant an equitable ruling likely based on whether/when the plaintiff filed the dismissal [without prejudice].

If the dismissal has not taken place prior to the closest date with that month and year and the parties have made no effort to clarify the ambiguity, the defendant's failure to make the downpayment by then would support the conclusion that the parties tacitly rescinded the settlement agreement.

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