Question 1

What makes a settlement agreement legally binding in Canada?

Accepted Answer

A settlement agreement is binding when it has offer, acceptance, consideration (usually a payment), and intention to create legal relations. Both parties should sign and retain copies.

Question 2

Are settlement payments taxable in Canada?

Accepted Answer

It depends on the nature of the payment. Employment income settlements are taxable. General damages for personal injury are tax-free. Punitive damages and interest are taxable. CRA assesses each component separately.

Question 3

Can I enforce a confidentiality clause in a settlement?

Accepted Answer

Yes, confidentiality clauses in settlement agreements are generally enforceable in Canada. Breach of confidentiality may allow the other party to seek damages or void the settlement.

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