Settlement Agreement

What Is a Settlement Agreement? A settlement agreement is a contract that ends a legal dispute between two or more parties without the need for a court judgment. The parties negotiate mutually acceptable terms, and once signed, the agreement is binding and enforceable. The vast majority of civil lawsuits are resolved through settlement rather than trial. ## Common Settlement Terms - Payment amount and schedule (lump sum or installments) - Mutual release of all claims arising from the dispute - Confidentiality provisions regarding the settlement terms - Non-disparagement clauses - Admission or denial of liability (most settlements include no admission of fault) - Dismissal of pending legal actions with prejudice ## Key Considerations Settlement agreements should be drafted with precision to avoid ambiguity and future disputes. Parties should consider the tax implications of settlement payments, as different types of damages receive different tax treatment. Both sides should obtain independent legal counsel before signing. Once executed, settlement agreements are generally enforceable as contracts, and courts will uphold them unless obtained through fraud, duress, or mutual mistake.