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Settlement Agreement Must Clearly Describe the Claims Covered by the Agreement

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A good settlement agreement should clearly define the effect the agreement will have on future and current claims, and whether it applies to all claims between the parties, or only those claims arising out of a particular agreement or set of circumstances.

The article discusses a dispute between Standard and Poor and Parmalat. Standard and Poor’s agreed to pay Parmalat €14.5m ($16m) to settle a dispute over ratings it issued before the Italian dairy’s 2003 collapse. Parmalat initially sought more than €4 billion in damages from Standard and Poor’s, but eventually settled for the lesser sum of €14.5 million. The settlement was noted to have the effect of precluding any present, future, current and/or potential claim or finding of any nature, in any case connected or related to the issues arising from the mentioned ratings of the litigation proceedings. Therefore, the release was limited to claims arising out of the particular ratings, and did not extend to all possible dealings between the parties.

Read the article here.

Take away:

  • The settlement agreement should clearly specify whether all existing and future claims between the parties are covered, or if it only covers those arising from a defined set of circumstances.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Duress Should not Be Used to Obtain a Signature to Settlement Agreement

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Hollywood and Oscar nominated star Terrence Howard cried in court about his wife’s threats to release his private medical information. During acrimonious divorce proceedings, Howard was contacted by his wife and allegedly forced to sign a divorce settlement agreement under duress. His wife had informed that that if he refused to comply with her mediation settlement requests, that she would release private medical information about him.

While mediation and settlement are encouraged by the justice system, using blackmail to force execution of a settlement agreement will not likely be tolerated. Parties should be able to demonstrate that they had the opportunity to obtain independent legal advice before signing a settlement agreement.

Read the article here.

Take away:

  • A settlement agreement signed under duress can be nullified if a party can prove duress.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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$800,000 Purchases University’s Release From Sexual Assault Litigation

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A settlement is beneficial to the defendant in two distinctive ways. It terminates the legal action, and permits the defendant to end the litigation without admitting to any wrongdoing.

The article reports that the University of Oregon was able to end litigation initiated by a student who alleged that she was sexually assaulted by three basketball players. After the settlement, the plaintiff dismissed all claims against the university, including claims against the head basketball coach. The University stated that it had done no wrong, but did not want the bad publicity and were keen to end the lawsuit. The University considered the settlement amount of $800,000 an appropriate amount for a release from any further legal action by the alleged victim.

This example is a reminder that a settlement agreement is often the most cost effective method of resolving litigation.

Read the article here.

Take away:

  • A settlement saves face and prevents further legal proceedings.

 

–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Settling Is Not Admitting

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A settlement does not have to be an admission of wrongdoing. Most settlement agreements contain a statement that the settlement does not constitute an admission of wrongdoing. This is done to help protect the settlor’s reputation. The example depicted in this article was of a drug company accused of altering the article of a well-regarded pediatrician, so that the article understated the risks of a powerful antipsychotic drug. This drug was used to treat children with behavioural problems. As a result, the company was sued by many individuals.
The U.S. government announced that the company would pay $2.2 billion (U.S.) in fines and settlements. These settlements and fines were to resolve the federal civil and criminal investigations. However, the company stated that the civil settlements were not an admission of wrongdoing.

Read the article here.

Take away:

  • To settle an dispute does not mean any party admits to a wrongdoing. This makes settlement an even more attractive solution for disputes.

 

–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Release Negotiation Strategies Are Important

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The purpose of a settlement agreement is to “bury the hatchet” between the parties once and for all. The justice system encourages settlement as it avoids trials. However, it is essential for both parties to determine what “hatchet” to bury. In legal terms this process is called a “release”. The type of release to opt for when drafting a settlement agreement will depend on the specific situation at stake: if the releasor believes that the settled dispute deals with all possible wrongdoings on the part of the releasee, then a general release is appropriate. If, however, there may be possible wrongdoings by the releasee that are not accounted for in the settlement agreement, then it will be prudent for the releasor to opt for a limited release. The article provides more useful tips on how to carefully and cautiously draft releases.

Read the article here.

Take away:

  • Parties must select the appropriate form of release: a partial release or a full, general release.

 

–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Scope of Release Is Crucial to Settlement Agreement

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A good settlement agreement should clearly define the effect the agreement will have on future and current claims, and whether it applies to all claims between the parties, or only those claims arising out of a particular agreement or set of circumstances.

The article discusses a dispute between Standard and Poor and Parmalat. Standard and Poor’s agreed to pay Parmalat €14.5m ($16m) to settle a dispute over ratings it issued before the Italian dairy’s 2003 collapse. Parmalat initially sought more than €4 billion in damages from Standard and Poor’s, but eventually settled for the lesser sum of €14.5 million. The settlement was noted to have the effect of precluding any present, future, current and/or potential claim or finding of any nature, in any case connected or related to the issues arising from the mentioned ratings of the litigation proceedings. Therefore, the release was limited to claims arising out of the particular ratings, and did not extend to all possible dealings between the parties.

Read the article here.

Take away:

  • The scope of a settlement agreement should be carefully defined.

 

–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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