Settlement laws are often dictated by contract law. When a claim or lawsuit is settled without a court hearing, a written agreement makes the settlement legally binding on the parties involved in the dispute. The following are some written agreements that are often utilized to effectuate a settlement.
Release
A release is a written agreement between two parties memorializing the conclusion of a claim or lawsuit. The person receiving a monetary settlement signs the release, usually before a notary. In exchange for receiving a monetary sum, the victim agrees that no further claims or lawsuits may be brought against the other party arising out of the incident or occurrence. Once the release is signed and consideration is received, the release is binding on the parties and can be enforced by law.
Joint Tortfeasor Release
Situations can arise when more than one potentially at-fault party is involved in a claim or lawsuit. During the contest, one of the at-fault parties may agree to settle the dispute against the victim, while the other party continues to contest the claim. A written agreement called a joint tortfeasor release is signed between the parties who wish to end the dispute. Once this agreement is signed, no further claims or lawsuits can be brought against the party that is released. This agreement is binding on the parties and can be enforced by law. However, the claim proceeds against the other potentially at-fault party.
Structured Settlement
As an alternative to receiving a lump sum in settlement of a claim or lawsuit, the injured party has the option to accept a structured settlement. A structured settlement allows the injured party to receive guaranteed periodic payments either on a monthly or yearly basis, depending on the time horizon of the injured party. The structured settlement terms are outlined in a written agreement. Once accepted, the claim or lawsuit is concluded. Like a release, the injured party may not bring any further claims or lawsuits against the other party. A structured settlement also has tax advantages. The law allows tax free settlements in some cases.
Settlement Laws for Minors
Settlement law does not allow a minor to enter into a binding agreement such as a release or structured settlement without a parent or natural guardian. A minor in many jurisdictions is a person under the age of 18 years old. Because the minor is the victim, settlement law also requires the court to approve the resolution through a "minor's compromise." This is a legal document filed with the court, which outlines the terms of the minor's settlement. Once approved, it becomes binding on the parties.
Confession of Judgment
Another type of settlement is an instrument called a confession of judgment. This is a written agreement by the defendant in a lawsuit. The defendant admits liability and agrees to be responsible for a set amount of damages. This legal document may be filed with the court to secure an automatic judgment if the defendant fails to pay or perform in accordance with the set amount of damages. Additional legal proceedings can be eluded if a confession of judgment is executed between the parties.
Tags: claim lawsuit, structured settlement, written agreement, binding parties, injured party