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Settlement Agreement/More Info

Settlement Agreement
Additional Information

Although most contracts are completed to the satisfaction of both parties, sometimes disputes arise.  When both parties firmly believe that the other has breached some important obligation in the contract (or caused some problem), each must consider what steps to take. 

Filing a lawsuit and pursuing claims in court is an expensive and time consuming task.  Even if you win your lawsuit, the other party may appeal the decision, delaying your goal of satisfaction of your claim.  Even when a judgment becomes final, and no more appeals are possible, it may still be difficult to collect.  The other party may resist collection, forcing you to spend additional money to garnish wages or attach assets.  The other party may even file bankruptcy.  Even when a court decides in your favor, litigation is a difficult way to resolve problems. 

Because litigation may be impractical or because you may want to simply put the matter behind you, a settlement with the other party is often the preferred course of action.  When two parties to a disputed contract agree to settle it, it is always best to reduce that settlement to writing, even if the original contract was not written.  Otherwise, you may have no evidence that the claims against you have been released, and the other party or its assignee or estate may sue you. 

The Business Attorney Settlement Agreement makes a relatively straightforward arrangement between the two parties.  Each of the parties agrees to release claims against the other and consider the original contract discharged.  The form also provides that one party may pay another an amount of money as a part of the settlement.  The payment of the money is not required to make the Settlement Agreement enforceable.  However, in many cases, one of the parties to the contract may convince the other that payment is appropriate.  The money may be due to pay for damages or because both parties have suffered losses, but the losses of one of the parties is greater. 

Critical Information 
It is also wise to have the Settlement Agreement reviewed by an attorney before signing it.  In some states, statutes or case law require that specific language be included to avoid certain kinds of claims. 

For example, Section 1542 of the Civil Code of the state of California provides that a general release of someone else might not be effective for certain claims unknown or unforeseen at the time of making the release.  That is, one of the parties giving a general release might not realize that it had the right to sue for some particular claim, or might not be completely aware of the extent of the damages suffered.  Also, some damages might not show up until after the Settlement Agreement is signed.  While these unknowns exist, the parties in a Settlement Agreement usually want the settlement to be final, and are generally willing to take the risk that some unforeseen damage might appear at a later date. 

An attorney can advise you whether it is appropriate to include specific language to address a similar state law. 

This agreement includes a reference to Section 1542 in case one or both of the parties is a resident of California and intends to provide that this statute does not affect the release.