Sample Settlement Agreement and Release of Claims

If you are the defendant, you must ensure that all counterparty affiliates are covered by the claims release in order to expand the scope of the agreement. But even if you are able to make a claim, you may be willing to include such a provision if none of your affiliates would have a viable claim in any case. The parties should carefully consider the claims they wish to release under a settlement agreement and whether the wording of the settlement agreement covers those accurate claims. Indemnities can cover different categories of claims, including: When deciding which option is best for you, consider whether you want to rule out any potential litigation (which is appealing if you would be the defendant in a future dispute) or whether you want to keep certain claims that you can assert in the future. Most disputes are resolved, so it`s important for legal teams to be aware of the most important issues related to drafting a settlement agreement. This is especially true now that businesses around the world are grappling with the COVID-19 pandemic and the resulting pressure on supply chains and business relationships. Normally, the parties to a settlement agreement would be the parties to the disputed contracts or the parties to the ongoing dispute or arbitration. But should the deal apply to someone else? Consider whether you would be helpful in adding a provision stating that companies with a legal relationship with the parties also agree to release claims. For example, you can ensure that the release covers the „parent company, subsidiaries, assignees, acquirers, agents, principals, agents, agents, officers or directors of shareholders of a party, as well as any person acting by, by, under or in coordination with them.“ In some circumstances, you can also include a version that covers downstream clients.

It is also important to specify in the settlement agreement whether the waiver of claims is based on reciprocity. For example, if only one party has brought claims in an ongoing dispute, you may want the settlement agreement to release not only the claims claimed in the dispute, but also any claims the defendant may have in connection with the same underlying events. If companies decide to resolve issues amicably, the settlement agreement must accurately reflect the compromise reached by the parties. Too often, the focus is solely on the amount to be paid in exchange for the release of claims, but there are other equally important considerations that need to be addressed. The settlement agreement should clearly indicate the date of each settlement payment, the preconditions for payment and the funds for the transfer of that payment. Other considerations include whether you wish to have the opportunity to assign the right to receive payment to affiliates and, if so, whether such an assignment can be made with or without the consent of the other party. Parties to a settlement agreement often agree to pay their own attorneys` fees, but are there certain costs that the parties should share? For example, California Civil Code Section 1542 provides that a general waiver of claims does not extend to allegations that the indemnifying party „does not know or suspect the existence“ at the time of publication and that, if known, would have „materially influenced“ the settlement. If your settlement agreement is governed by California law or has any other connection to California, it must include a provision stating that the parties agree to waive Section 1542 to release unknown claims. In other words, do you intend to publish claims whose existence is not yet known, but which can be discovered later? If this is the case, the settlement agreement should expressly release all known and unknown claims. General compensation for claims is not always sufficient to release claims that were unknown at the time of settlement. Below are six questions that commercial and in-house legal teams should ask themselves when conducting settlement negotiations and entering into settlement and release agreements. The settlement agreement contains a provision explaining the confidentiality obligations and the parties usually agree that the terms of the settlement agreement must remain confidential.

However, ask yourself if you want to share the existence of the settlement agreement with anyone other than the parties to the agreement. For example, you may want your customers or certain business partners to be informed about billing. Confidentiality provisions also generally allow disclosures to the extent required by law, regulation or legal process. .

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