A release and settlement agreement is a legally binding contract that ends a lawsuit, often before one is even filed. One party agrees to release the other from their legal obligations in exchange for a settlement, often in the form of a lump sum of money.
While there are lots of templates for these contracts to be found online, using one that is not tailor-made for your particular needs and situation is risky.
How Do Release and Settlement Agreements Work?
Sometimes referred to as “release agreements” or as “settlement agreements,” release and settlement agreements bring a legal dispute to an end outside of the courtroom. That legal dispute can be nearly anything, like an alleged:
- Breach of contract
- Violation of a non-compete agreement
- Unfair trade practice
- Slip and fall in your store
- Employment dispute
- Commercial lease dispute
- Defamatory remark on the internet
All of these cases involve a party that has been harmed, be it a commercial landlord whose lease is being broken, a small business whose contract is being breached by a vendor, or a consumer who has been hurt. These allegedly aggrieved parties have, or at least think that they have, a legal claim for compensation of some sort.
The release and settlement agreement is the resolution of that legal claim outside of the courtroom. This agreement can be executed at any time before trial, or even before the lawsuit has been filed.
These Agreements Should Be Tailored to Your Needs and Interests
Both the party making the legal claim and the party facing it need to have a release and settlement agreement that is effective and all-encompassing.
The aggrieved party needs to make sure that the agreement adequately compensates them for their losses. It is not uncommon for defendants to push them into signing a release and settlement agreement that does not match the negotiations that led to its creation. Furthermore, many of these agreements involve specific performances by the defendant to rectify the wrongs they are being accused of committing. The agreement has to make sure that they will follow through.
For the party facing the legal claim, the risks posed by a bad release and settlement agreement are even higher: They could be compensating the aggrieved party without ending the legal threat. The agreement needs to release them from all of the legal claims that the aggrieved party has, not just some of them, or else the aggrieved party could come back later on, demanding more. Additionally, poorly-worded release and settlement agreements could admit to wrongdoing or to liability, hurting the defendant's business brand.
Massachusetts Business and Contract Lawyers at the Katz Law Group
Release and settlement agreements are the finish line in a legal dispute. All of the sensitive negotiations culminate in the drafting and, hopefully, in the signing of this critical document.
This is not the time to make a mistake.
The business attorneys at the Katz Law Group have four decades of experience resolving business disputes between companies and individuals. Contact them online or call their Massachusetts law office at (508) 480-8202 for legal representation at this crucial moment.