Yehuda owed me a significant sum of money, but he had many counterclaims. We compromised on a percentage of the amount I claimed and put our dispute to rest.

Q: Is our oral agreement sufficient, or is a kinyan (halachic acquisition) necessary for the negotiation to be binding?

A: The main issue involved in your question is whether a verbal commitment is binding without a kinyan. Generally, a transfer of one’s possessions or rights requires a kinyan. The exception to that rule is mechila (forgiving a debt), which does not require a kinyan (C.M. 12:8, 241:2). The reason is that the one forgiving the debt isn’t transferring anything; he is merely forgoing the debt and lien he had on the debtor, whereas the transfer of ownership requires a kinyan.

A mutual compromise raises an interesting question in that it contains two parts: the amount the claimant forgoes from his claim, and what the defendant agrees to pay. Based on the principles stated earlier, some rule that the part the claimant forgoes does not require a kinyan, while the amount that the defendant agrees to pay does require a kinyan (see Nesivos 12:4). Others suggest that although a kinyan is generally necessary for a commitment to be binding, the mutual agreement between the claimant and the defendant in this case makes both of their respective commitments binding. Here, the claimant’s agreement to forgo some of his claim is “payment” to the defendant, making the defendant’s agreement to pay binding (Teshuvos Divrei Chaim C.M. Vol. 1 #4, and others).

A third approach takes the opposite perspective. Normally, a mechila is binding because it involves merely forgoing a debt and lien. When there is reason to assume that a claimant agreed to a compromise under duress, even mechila is not binding. This is similar to a case where the claimant agrees that Bais Din should have the authority to issue a compromise. He could later contend that the Bais Din misled him when they advised him to accept their compromise, and it is therefore necessary to confirm his commitment with a kinyan (C.M. 12:7, Sema 15, Shach 12). Similarly, only in a compromise where the claimant voluntarily agreed to forgo some of his claims is there no need for a kinyan to validate his mechila. However, if the defendant has counterclaims and the claimant agreed to compromise after negotiating with the defendant, there is reason to suspect that the claimant compromised some of his claims due to concerns of the counterclaims. Therefore, although the claimant and defendant agreed to the compromise outside Bais Din, it is necessary that the claimant agree to forgo his claims with a kinyan (Avnei Tzedek Vol. 1 #2).

In summary, in your case, since the defendant had counterclaims against you, the validity of the compromise is subject to the previous dispute. As such, it is best to make a kinyan (C.M. 12:7) or to draw up a document that records each of your commitments and uses terminology that is binding according to all opinions (see C.M. 12:13 and Bais Shlomo #3).