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After two or more parties reach a mutual agreement to resolve a legal dispute, they may sign a settlement agreement. Parties sign this legally binding contract after negotiations but before final judgment.
A settlement agreement can help:
To make a settlement agreement valid and approved by a judge, here are 9 things to include in your settlement agreement.
The legal purpose of a settlement agreement expresses the intent and reason for the agreement between all involved parties.
A settlement agreement aims to resolve a dispute and reach a mutually agreed outcome. However, the exact purpose and resolution will vary by the type of settlement.
A marriage settlement contract, for example, will seek to legally reach an agreement on the terms and conditions surrounding a divorce. On the other hand, a business settlement between a company and consumer will seek to minimize harm and rectify any damages.
Here is an article that explains how to prepare for a settlement agreement.
To be legally binding, the settlement agreement must propose a possible resolution to the dispute. This can ultimately lead to the release of future liability, expressed through a settlement and release agreement.
Both parties agree to resolve and end their dispute on mutual terms through a settlement agreement and mutual release.
Before this can happen, however, one party must propose a resolution to the dispute and extend it to the other party. Be open to negotiation as this is a key part of reaching a fair outcome.
Here is an article about how to write a settlement proposal.
Once one party makes a settlement proposal, the other parties must review the offer and, if they desire, counter with their own. Settlement negotiation takes time and often involves lengthy discussions and eventual compromise.
All parties must express their purpose and desired outcome to reach a mutual settlement. This allows them to align their objectives and ultimately reach a mutual agreement.
Only after all parties accept the terms can they reach a final settlement. This also applies in cases of trade, when the buyer must deliver payment to the seller before they provide any assets. But, again, this will be determined by the final settlement date.
Here is an article that defines the role of a settlement date in business.