A contract settlement agreement is an agreement between persons or corporations to resolve a dispute. The resolution is formulated into a written contract, which is binding on the parties who sign the settlement agreement.
Agreement to Settle
A contract settlement agreement comes into fruition when the parties agree to settle their dispute. Agreeing to forgo future litigation as well as the right to bring other claims in exchange for a sum of money is a common form of settlement agreement.
Written Contract
When the terms of the settlement agreement are negotiated and finalized, the agreement is conformed into a written contract and signed by the parties. This contract is sometimes referred to as a settlement agreement or a release.
Contract Terms
The settlement agreement or release records all the contract terms. Contract terms include the names of the parties, the monetary amount, reference to the nature of the dispute, hold harmless language, and who is responsible for future liens or unforeseen future damages.
Legal Effect
The contract settlement agreement is binding on the parties. This means the contract can be enforced by the court. The agreement may also be binding on the parties' heirs, executors, future owners, and anyone assigned the settlement agreement.
Agreement in Principle
Sometimes, a contract settlement agreement is an agreement in principle pending approval from another authority such as a court of jurisdiction or the principle owners, if a corporation is involved.
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