Enforcement or Cancellation of a Settlement Agreement

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 What is a Settlement Agreement?

A settlement agreement is a legally binding contract document that shows evidence of parties agreeing to certain terms and conditions resulting from negotiations. There is no requirement that the agreement be in writing but it is highly preferred. 

The purpose of the settlement agreement is to end the dispute among the parties. They are generally used to end negotiations and resolve future disputes. An effective settlement agreement takes into consideration all the risks and evaluates them to create solutions that the parties agreed upon themselves. Another important aspect of the agreement is to transform the parties misunderstanding into mutual understanding terms. 

How are Settlement Agreements Enforced?

In general, enforceability of settlement agreements vary among the different jurisdictions. One of the most common ways to enforce them in court is to file a motion. For example, according to the California law entering into a settlement agreement requires that the agreement must be either in writing, signed by all the parties outside the court or may take the form of an oral agreement made in the presence of the court.

The court must have jurisdiction over all the parties until the settlement has been fully performed, meaning granting the court the ability to enforce the settlement’s terms. However, if one of the parties fails to follow through with the settlement agreement, the aggrieved party may file a motion in court to enforce the agreement. Generally, the motions requests the court to enter a judgement pursuant to the settlement’s terms. 

The role of the judge hearing the motion is to examine the evidence and hear oral testimony. Additionally, the judge may also consider the factual disputes regarding the settlement. If the judge finds that the settlement is sound in its terms, it may then enter a judgment pursuant to those terms.

Furthermore, for the settlement agreement to be legally enforceable certain requirements must be met. Some of these requirements include: 

  • Drafting of the agreement by a qualified attorney; 
  • Appointing the legal advisor in the agreement; 
  • Formally having the agreement in writing and; 
  • Specifying which claims if any are being waived. 

Can a Settlement Agreement be Cancelled?

It is possible to back out of a settlement agreement if both parties consent and it has not been incorporated into a court order. However, the issue arises if the other party does not agree. Usually, courts are reluctant to allow a party to back out of a settlement agreement if it is made in good faith with the parties involvement. The settlement agreement can be voided if it was formed through fraud or misrepresentation. 

If a person can refuse to sign a settlement agreement in the first place depends on how it was formed. If there was an oral agreement a signature may not be required for it to be enforced. Researching the local jurisdiction will allow a better understanding of how the court would rule on an oral agreement between the parties. The court can hold a hearing to determine if there was a meeting of the minds and good faith agreement for the settlement. If so, it is unlikely for either party to back out of the agreement. 

Cancelling a settlement agreement is a complex matter and may require the assistance of an attorney. A qualified attorney can review the settlement agreement and determine what the options are under contract laws. They can also provide advice and input regarding alternative options.

Can a Settlement Agreement be Modified? 

Furthermore, the settlement agreement can be modified, if there can be a showing by the party that there has been a significant change of circumstances. If this occurs, the party can seek modification from the court for the settlement agreement. Below are some situations in which modification may be permissible:

  • The obligations placed on the parties later become impermissible under federal law; 
  • Statutory or decisional law has been altered in a way that makes legal what the decree was designed to prevent and; 
  • The parties entered into the decree under the mistaken belief certain conduct was constitutionally mandated.

The proper motion needs to be filed for a modification in the settlement agreement. The party seeking modification has the burden of showing that a significant has occurred for the modification of the settlement agreement. A reasonable basis for the change is sufficient to show for the modification request for the court. 

However, simply inconvenience in following the terms of the agreement does not suffice as a valid reason to modify the contract. There is no requirement for the part to show that the changed circumstances were either foreseeable or unforeseeable.The rules regarding the exact requirements will vary among the different jurisdictions and what the process is like to request a change in the settlement agreement. 

Therefore, the court may consider several factors for the modification of the settlement agreement. For example, they may look to the events leading to the settlement agreement, what the specific hardship is, and the interests of the other party not wanting to modify the agreement. 

What To Do If There’s a Breach of Settlement Agreement

After the parties resolve their disputes and come to an agreement, they can stipulate in those agreements terms that would outline the course of action in case a breach occurred. A breach is when either party refuses to adhere to the agreed terms and conditions outlined in the settlement contract. In brief, a party that breaches a settlement agreement will risk being forced to complete the agreement and paying the legal costs of the party seeking to enforce the agreement.

The process to obtain breach of settlement agreement damages can vary depending on the different states. A separate lawsuit may need to be filed in order to obtain the damages from the breach of the settlement agreement. Typically, the settlement agreement will stipulate the course of action, penalties or fees that need to be paid if either party fails to follow its legal obligations under the agreement. 

A majority of the cases are settled out of court. There is a possibility to obtain an out of court settlement. There is the uncertainty of what will occur at trial, costs of court, and lengthy proceedings. One of the advantages of settling out of court is that the parties are in control of their privacy and do not have to share information regarding the settlement with the public, including the terms of settlement.

Do I Need a Lawyer for Assistance with a Settlement Agreement?

The process of drafting a settlement agreement can be time consuming and draining. It is recommended to seek out an attorney that can closely examine the nuisances in your local jurisdictions to determine the best possible outcome for the legal dispute. A settlement agreement needs to be carefully crafted to balance the risks and provide a workable platform for both parties to abide by. 

It is important to include terms that are both mutually favored by both parties and draft  a document that can end future litigation. A settlement agreement is a crucial document in ensuring that the parties come to terms with their disputes. Contact your local personal injury lawyer to obtain more information on how to receive assistance with a settlement agreement.  

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