Deals, agreements, and contracts are part of everyday life. You go to a coffee shop, order a pastry, and the cash register delivers a receipt determining what you owe in return. But what happens if you don’t meet your end of the bargain? 

If you’ve read our previous article, you may know that giving away a croissant is the last of your worries. Lawsuits, on the other hand, are a rollercoaster that you may want to avoid—and often, the best situation is to resolve the dispute before filing a breach of contract case with the court.

A settlement agreement is a written document that outlines a legal dispute resolution. After two or more parties reach a mutual agreement, they can sign the contract (“settlement agreement”) and fulfill their responsibilities. An impartial member, such as a lawyer, will often support those involved during negotiations to define the terms fairly. 

Settlement agreements are frequently used in property disputes, personal injury claims, criminal defence, and employment cases. These agreements are vital in preventing long-winded court tribunals and sparing parties from paying high legal costs for ongoing litigation and trial.

Let’s take a look at what to consider when creating settlement agreements.

The intent

The legal purpose or reason for the agreement between all involved—the intent—will depend on the type of settlement.

For instance, an employer settlement will seek to limit employee harm while rectifying company damages, following employment laws. At the same time, a settlement contract regarding tax theft will look to retrieve the stolen amount with regard to the False Claims Act.

Practitioners are there to help you research potential terms, consult with you about possible solutions, compile relevant paperwork, and scope the extent of the release. 

Present the offer

The offer is what one party proposes as a possible resolution to the dispute and extends it to the other party. This is crucial to reaching a fair outcome, so be open to negotiation.

Take debt settlements, for example. Say you owe $10,000. Generally speaking, offering 25–50% as a lump sum is a good starting point to avoid it being rejected completely, but also bearing in mind what you can realistically afford. You will need to ensure all the relevant account information, supporting documents, and justifications are available to prove why this amount is the maximum you can offer and how you will provide it. 

There is no such thing as a ‘boilerplate’ settlement agreement. Once you understand the possible settlement options, the offer is where you can have creativity within the limits of the law. For example, say you filed a lawsuit for defamation when a competitor wrote a bad online review. You may decide to draft a settlement agreement that prohibits either party from saying anything negative about the other going forward.

The ultimate goal is the release of future liability to the previous contractual agreement. Take your time to think about the resolution you suggest. 

Demonstrate fair considerations of both parties

Different laws and terms exist when it comes to business, estate planning, or financial disputes, and not addressing them can significantly impact your rights. It’s also essential to ensure the terms follow the laws in your state. These must be properly expressed in writing to have a legally binding settlement agreement.

To keep disputes as civil as possible, ensure you do your research. Accidental breaches, such as using registered marks, can lead to problems. Even if you are the middleman unaware of supplying copyrighted branding, you, too, can be liable for infringement. It is critical to understand intellectual property rights, particularly when purchasing items overseas with a company name.

In the case of property disputes between couples that are not married and without children, it is recommended you draft and sign a property agreement before a conflict or breakup occurs. In most states, when there are joint assets, such as a shared bank account or both names on the deed to a house, each person is entitled to a 50% share unless they can prove a more considerable contribution.

The last step is to always make sure the conditions are fair before signing, as the settlement agreement will become binding and a copy will be provided to the Judge. This way, if either party violates the agreement, they can be held in contempt of court.

The legal drafting of settlement agreements is a tricky process that often takes experience to perfect. Find a dispute lawyer to ensure you get everything done right.