A “settlement agreement” is a general term for the document where one party agrees to release and discharge the other from liability in exchange for some “consideration” (eg cash, a cease and desist or another remedy).
Language
Most settlement agreements boil down to some series of statements like:
1. Release and Discharge
Given Defendant’s agreement to render Considerations outlined herein, Plaintiff completely releases & discharges Defendant of all past, present or future claims, obligations, rights and expenses which the Plaintiff may now have.2. Consideration
Given the Release and Discharge outlined above, Defendant agrees to pay Plaintiff [some amount]. Defendant also agrees to cease and desist all [activities] after execution of this Agreement.
Application
Many settlements involve one facet of personal injury or another: car accidents, asbestos exposure, whiplash, back injuries and more. Not every settlement involves injury, though. The language cited above could easily fill the needs of legal situations such as
- marriage & separation settlements
- tax settlements
- insurance settlements
- workers compensation settlements
Confidentiality
The confidentiality of these settlement agreements is also up for negotiation. Many settlements regarding business liability are often confidential, where rulings like class action settlements are (by nature) public.
Settlement Funding
Once a settlement has been reached, the distribution term can be set as a one time event or, more often, they payments are metered out over months, years and even decades. There are many settlement funding agencies that make “cash out” offers to give a single lump sum payment in lieu of this small, steady stream of money. There are risks involved – these agencies aren’t in the business to lose money – but extenuating circumstances often dictate their use.
