What Is A Settlement Agreement?

What Is A Settlement Agreement?

July 18, 2022

Ellis Law Corporation

Settlement Agreement

When a civil claim is initiated, the parties have the opportunity to come to an agreement outside of court before the case goes to trial. In fact, the majority of civil claims for personal injuries and wrongful deaths are settled before they get to trial. It’s almost always quicker, less stressful, and less expensive than litigating the issue in court. If you have any questions about settlements or civil claims in general, contact us to schedule a free consultation.

Elements of a Settlement Agreement

Settlement agreements act as legally binding contracts that are used to resolve civil claims before they get to trial. While most settlement agreements are fairly similar, there will be differences depending on the type of case and the circumstances of the incident. However, there are legal requirements that all settlement agreements must contain, including the following:

  • The offer that one party has made
  • An acceptance of the offer and its terms by the other party
  • Valid consideration must be present from both parties, meaning some tangible item of value or an intangible benefit has been offered by one party to the other
  • Proof that both sides have made an informed decision and no coercion was involved
  • There must be a legal purpose to the settlement agreement

How To Prepare For a Settlement Agreement

Before any agreement is made, it’s important to consider the circumstances and understand what you’re legally entitled to. You should always do this with the help of an experienced attorney. Your lawyer can help you calculate the compensation they believe you deserve, and based on that amount, you can decide if you are going to accept an offer from the other party. If the offer is too low and you and your lawyer believe you would be awarded significantly more at trial, you can counteroffer, and take the case to court if necessary.

Another consideration to take into account before signing a settlement agreement is how the money will be paid out. Will it be paid in a lump sum, or in weekly or monthly installments? These are things that will be spelled out in the agreement to ensure that all parties are on the same page.

Finally, it’s worth noting that, ultimately, the judge has the final say over a settlement agreement. While the case won’t be litigated in court, the settlement agreement is coming from the initiation of a civil lawsuit, and the judge will have to approve or deny the agreement. In some cases, the judge may feel that the agreed upon compensation is not enough and will order the parties to renegotiate and give them guidance to reach an agreement on a different number. A judge may also reject a settlement agreement if he believes negotiations were done in bad faith, and one party is being taken advantage of. This is more likely to occur when an individual and a large corporation are negotiating.

Why You Need a Lawyer

Many people wrongly believe that they can negotiate an appropriate settlement without a lawyer and walk away with just as much money. This is almost never the case. If you’re negotiating with another party’s attorney, unless you are well-versed in the law, you’re always going to be at a disadvantage. The other attorney will assume, probably correctly, that you aren’t as knowledgeable as an attorney, and may try to take advantage of the situation by offering you less desirable conditions. Additionally, the settlement agreement needs to be drafted and reviewed. Trying to review a contract on your own without training can be problematic. There may be terms that you don’t understand, and you could unintentionally sign something that isn’t in your best interest.

If you have questions about settlement agreements or need help with a civil claim in any other way, contact us today to set up a free consultation with our Los Angeles personal injury attorneys.