A settlement agreement records the terms on which parties resolve a dispute. A clear document prevents later arguments about what was agreed.
Key parts
- Parties and description of the dispute.
- Payment amount, dates and method.
- Mutual release of claims.
- Confidentiality and non-disparagement where used.
- Dismissal of any lawsuit.
- No admission of liability.
- Enforcement and governing law.
Mistakes to avoid
- Vague release language.
- No deadline or consequence for missed payments.
- Forgetting taxes and liens.
- Not covering related claims.
- Informal agreements by text only.
Steps
- Agree on the terms in writing.
- Have each party review with advice.
- Sign and keep copies.
- Make payments as scheduled and document.
- File a dismissal if litigation is pending.
Get help
Use a lawyer for large amounts or complex disputes. See our guide to settlement agreements explained.
Frequently asked questions
Can a settlement be enforced?
Yes, like a contract.
What if the other party does not pay?
You may sue to enforce it, or ask the court to enter judgment if agreed.