While taking a case to trial is sometimes the only way to resolve an issue, the process can be long, stressful, and expensive. It can also damage your privacy because your personal affairs are being discussed in court and typically become public record. Due to these factors, many people attempt to settle their issues before a trial becomes necessary. This often involves negotiation or mediation with lawyers or other neutral third-party facilitators to resolve the dispute. If an agreement is reached, then it must be legally documented so it can be signed and enforced. The contract created for this purpose is known as a settlement agreement. Once the settlement agreement is drafted and signed, it must be approved by a judge before it goes into effect.

What Must a Settlement Agreement Contain?

Drafting a well-thought-out, enforceable settlement agreement that meets the needs of both parties requires attention to detail and a great deal of legal knowledge. Once written and signed, it is considered a binding contract. However, the document must meet certain legal requirements to be valid. While the exact specifications can vary based on the jurisdiction, the basic elements needed include:

  • An offer that is proposed by one party, which they agree to complete.
  • An acceptance of the offer by the other party involved.
  • A benefit or other reasonable tangible or intangible gain for both sides.
  • Mutual assent, without coercion, to the terms of the agreement.

A settlement agreement may also specify certain conditions, such as how long the parties have to complete their obligations, exactly how those obligations will be carried out, and whether the settlement will be kept confidential. Sometimes one side will only settle if it is stated that they accept no wrongdoing or liability in the case. Other settlements preclude one side from bringing further legal action against the other party for any similar future issues. Many different conditions can be included in a settlement agreement, so this is why it is imperative to have it written clearly by a professional and for both sides to read it carefully before signing.

When is a Settlement Agreement Used?

A settlement agreement can be used to resolve almost any legal situation where there is a dispute between parties. Typically, one side will agree to pay a certain amount or perform particular actions in exchange for the other party dropping any court proceedings. The details of this agreement are worked out using mediation, and both sides must freely agree to the settlement details. This allows both parties to air their grievances and decide what outcome is preferable (or at least acceptable) to them without having it decided for them by a judge or jury. The settlement agreement will have a record of the agreed-upon version of events for the situation and what actions both sides must carry out to end the disagreement. Some circumstances where a settlement agreement may be used are:

  • Medical malpractice
  • Divorce proceedings
  • Property damage claims
  • Personal injury cases
  • Employment disagreements

Why Hire a Lawyer to Draft a Settlement Agreement?

A settlement agreement is a complicated document that is legally binding. By signing it, you are entering into a contract with the other party, and you must fulfill your assigned obligations or risk legal consequences. Because of this, you should consult with a lawyer familiar with drafting settlement agreements. You do not want to go through the time and hassle of negotiating and creating an agreement only to find that it is not valid or enforceable. It is just as bad to find that your agreement does not cover all the conditions you intended or hoped it would. An experienced lawyer can prevent these negative outcomes and ensure that your settlement agreement meets your needs and expectations so you can put your legal concerns behind you.