There is no one form for a settlement agreement. There may be a drastic difference between personal injury settlement agreements and business litigation settlement agreements. A person injury settlement document may be short and simple while the commercial case may be long, detailed and complex.
Whether the settlement agreement is for a car accident case or a business dispute, they often begin with a list of definitions. Definitions often include defining the parties and representatives. We also see a section for contractual recitals that include a statement of purpose. For example, you may see a statement like: “WHEREAS, Defendants have denied and continue to deny all such allegations and claims by Plaintiffs; and Plaintiffs have denied and continue to deny all such allegations by Defendants.”
I would expect a section that explains the mutual covenants and conditions. For example, that Plaintiffs will release acquit and discharge Defendants, their heirs, successors or assigns and their officers, employees, consultants, attorneys and or agents from any claims, demands and causes of action related to the lawsuit.
Under certain situations, I would expect to see a section that explains that the persons and entities agree to be bound by the settlement agreement. An example statement may be: “Plaintiffs understand and agree that by execution hereof, the terms of this Settlement Agreement are binding upon Plaintiffs and upon all representatives, successors and assigns of Plaintiffs.”
Under certain situations, I would expect to see a section covering a statement that there are no outstanding claims. In addition, there may be a statement that the Parties warrant and represent that they have not assigned, authorized or transferred any claims, demands, suits, and causes of action to someone else.
The consideration should be identified. For example, a statement may say, “In consideration for Plaintiffs agreeing to forgo pursuing any and all claims mentioned above and for such other provided consideration described in this document, Defendants accept such consideration and settles, compromises and releases of all claims, pursuant to this Settlement Agreement, against Plaintiffs.”
The above is not an all-inclusive list. There are many more potential and important clauses that may be included depending on the circumstance. Consult a lawyer if you need assistance.
– Article By Richard Weaver