A settlement agreement allows both parties to develop and agree to terms.
Litigation can be expensive, both financially and emotionally. A settlement agreement allows both parties to avoid litigation, or put an end to existing litigation, by developing and stating mutually agreeable terms. A settlement agreement is a binding document and holds both parties to the terms of the agreement such that if either fail to perform, the other party may recover damages for breach of contract.
Named Parties
A settlement agreement must state the names of the parties involved in the dispute, including any additional names used by the parties. For example, one might state her business name, and any DBAs used by the business which could be named in the lawsuit by another party. All parties also must sign at the end of the document, which creates a binding agreement.
Date
A settlement agreement must state the date of execution of the agreement. Accurately dating the agreement is important in case there are later amendments to the agreement that will make null an earlier version of the agreement.
Nature of the Dispute
The settlement agreement should state, in very general terms, the nature of the dispute. For example, it might state, "Whereas the parties to this agreement ended their professional relationship on x date, and subsequently Party A instigated legal action based on wrongful termination...." This states the general nature of the dispute but does not go into evidence or specific details.
Terms of the Agreement
The settlement agreement must state what the terms of the agreement are and what has been agreed on in exchange for ending the litigation. It should state the length of the agreement, whether it has a specific lifespan or exists in perpetuity. The agreement also should state any confidentiality terms.
Remedy
The settlement agreement must state what the remedy will be if breach of the agreement occurs, including where the case will be filed and what will be sought by the moving party.
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