Tag: Contract

Is the Confession of Judgment Provision In My Contract Enforceable?

Answer: In a consumer transaction, no.¹ In a commercial transaction, it depends.

A typical “confession of judgment” provision in a commercial contract (e.g., a promissory note) authorizes the creditor upon a default under the agreement to obtain a judgment for the amount owed without notice to the debtor(s) or guarantor(s), and allows the creditor to immediately execute on the judgment. The clause will most likely contain a “warrant of attorney” authorizing the appointment of an attorney to appear for the debtor, to waive personal jurisdiction and service, and to consent to an amount due and owing by the creditor. Thus, a party in default under an agreement containing a confession of judgment provision often first learns about the lawsuit against him after collection efforts have begun, when his bank accounts have been frozen or a lien has been recorded against his property. Courts will permit this judicial “shortcut” only if (a) the contractual provision is enforceable in the first place, and (b) the creditor takes the right steps to obtain the judgment after a default.

On the first point, a judgment by confession is void where it requires extrinsic evidence to prove the underlying debt. The Illinois Supreme Court in Grundy County Nat. Bank v. Westfall, 49 Ill.2d 498, 500–01 (1971) has held: “Judgments by confession are circumspectly viewed. … ‘The power to confess a judgment must be clearly given and strictly pursued, and a departure from the authority conferred will render the confessed judgment void.’ The extent of the liability undertaken must be ascertainable from the face of the instrument in which the warrant is granted. … ‘A judgment by confession must be for a fixed and definite sum, and not in confession of a fact that can only be established by testimony outside of the written documents, required by the statute to be filed in order to enter up a judgment by confession.” See also Ninow v. Loughnane, 103 Ill.App.3d 833, 836 (1st Dist. 1981); State National Bank v. Epsteen, 59 Ill.App.3d 233 (1st Dist. 1978). Numerous other courts have likewise held that a guaranty or underlying instrument purporting to grant power to confession judgment that is all-encompassing—for example, one that refers to “any and all debts, liabilities and obligations of every nature or form of the debtor,” including future debts, is so broad as to be void. Thus, if your confession of judgment clause is broad-sweeping or does not clearly describe the extent of the debtor’s liability, or if proving the amount owed requires reference to other documents extraneous to the instrument itself, the confession of judgment clause – and any judgment later obtained thereon – is void. While it is certainly advisable for clients finding themselves on the defensive end of this situation to act quickly, Illinois law permits a void judgment to be attacked at any time.

As to the second point, because the confession of judgment remedy is a creature of an Illinois statute, it must be strictly construed. See 735 ILCS 5/2-1301(c).  Voidness issues aside, that section requires the creditor to file a confession judgment suit only in the county in which (1) the note or obligation containing the confession of judgment clause was executed, (2) one or more of the defendants reside, or (3) in which any real or personal property owned by any of the de­fendants is located.

Because Illinois courts view judgments by confession with some skepticism, the law affords various remedies and means of challenging them not covered by this article. For further information on how to defend a judgment by confession case or to use such a provision offensively, contact:

Katherine A. Grosh at:

(312) 368-0100 or kgrosh@lgattorneys.com.


¹ A “consumer transaction” is defined as the “sale, lease, assignment, loan, or other disposition of an item of goods, a consumer service, or an intangible to an individual for purposes that are primarily personal, family, or household.” 735 ILCS 5/2-1301(c). If the instrument authorizing the judgment by confession in a consumer transactions was executed prior to September 24, 1979, however, it is still enforceable. Id.

Employee Bound by Handwritten Note Settling Employment Discrimination Case

People are often encouraged to “put it in writing”.  Generally, that is an excellent idea.  But occasionally it may be a disadvantage, especially if what was thought to be an informed memorandum turns out to be a definitive settlement agreement.

Martina Beverly sued her former employer, Abbott Laboratories, for employment discrimination.  The parties agreed to mediation.

The Mediation session lasted fourteen hours with each party being represented by an attorney.  Toward the end of the mediation, Beverly, as well as an Abbott representative and both parties’ attorneys signed a handwritten memo that read as follows:

I Jon Klinghoffer will commit that my client will communicate to its internal business client the fact that Abbott/AbbVie has offered $200,000 + Abbott/AbbVie pays cost of mediation to resolve this matter and that Martina Beverly has demanded $210,000 + Abbott/AbbVie pays cost of mediation to resolve this matter. Both parties commit [sic] that their offer and demand will remain open until Tuesday, July 22, 2014, 3:00 PM central.

The next day, Abbott’s attorney sent an email to Beverly’s attorney agreeing to accept Abbott’s $210,000 offer and attaching a formal settlement agreement for review.  Almost immediately, Beverly’s attorney emailed an enthusiastic response and, concurrently, sent the settlement agreement to Beverly for her review.

Beverly ultimately refused to sign the formal settlement agreement and Abbott went to court to enforce the hand written agreement.

Abbott asserted the handwritten agreement contained an offer, Abbott’s acceptance and a meeting of the minds.  Beverly claimed the handwritten agreement was simply a preliminary memorandum that a contemplated the drafting and execution of a formal settlement agreement.

The court ruled that Beverly was bound by the handwritten document because it set forth all of the essential terms of the settlement and because both parties and their respective attorneys had signed it.

Although Beverly argued the handwritten agreement omitted a number of material provisions such as identification, future cooperation between the parties, Beverly’s future employment options with Abbott, the allocation of the $210,000 between back pay (which is taxable) and damages, (which was not) and any language regarding waiver and release, that made it unenforceable, the court ruled a contract may be enforced even if some contract terms are missing or are left to be agreed upon at a future date.

This case demonstrates that when parties are engaged in efforts to resolve a disputed matter they should approach with great caution a rush to produce an informal memorandum of understanding.  It may have a legal significance that transcends their expectations when they signed it.

If you have any questions in this area, please contact:

Michael L. Weissman at:

mweissman@lgattorneys.com or 312-368-0100.

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