Sample Settlement Agreement
There are many circumstances when a business owner might wish to settle a dispute out of court instead of engage in costly litigation or allow a grievance to drag on that could ultimately harm the owner both from a reputation and from a fiscal perspective. A well drafted settlement agreement should fully dispose of all items of contention between the parties and should also make a reasonable effort to kept the terms of the settlement confidential. Below is a sample agreement that outlines some of the things that you should consider including in any settlement agreement.
Provided is a sample settlement agreement:
This Settlement Agreement (“Agreement”), dated as of Month, Day, Year (“Effective Date”), is entered into by and among Party One, LLC (“Ad Agency”) and Party Two, LLC (“Party Two”), collectively, the “Parties,” and each referred to as a “Party.”
WHEREAS, Describe the basis for the settlement agreement. Party One and Party Two are in dispute as to terms x, y, and z of a contract involving the purchase and sale of goods (the “Dispute”);
WHEREAS, Describe what actions have already taken place. Party One has sent a demand letter (a copy of which is attached hereto as “Attachment One”) wherein Party One demanded remedies a, b, and c. As a result, Party Two responded to said letter with their own demand letter (a copy of which is attached hereto as “Attachment Two”), demanding remedies d, e, and f (together, the “Letters”);
WHEREAS, Party One and Party Two deny the claims asserted by the other Party in the Letters;
WHEREAS, Party One now desires to settle, without limitation, the Dispute and the Lawsuits, as well as all claims by and among them as of the Effective Date, and to provide for other terms and relief as more fully set forth herein.
NOW THEREFORE, in consideration of the foregoing premises, which shall be deemed an integral part of this Agreement, and of the mutual covenants and agreements set forth below, which the Parties each acknowledge and agree are good and valuable consideration, receipt and sufficiency of which are acknowledged by each, the Parties each agree as follows:
- Settlement Payment. Describe the Settlement Agreement sums, terms, or provisions. Party One agrees to pay Party Two the total sum of two million dollars ($2,000,000) (the “Settlement Amount”) within thirty (30) business days of receiving by Party One: describe what you want in return. (1) return of certain assets and (2) and executed agreement to conduct some further action from Party Two. Describe what happens if the other party doesn’t fulfill their obligations. If all obligations aren’t fulfilled then this Settlement Agreement along with all of its provisions and stipulations shall be wholly null and void and shall have no legal or binding effect of any nature on either of the Parties hereto.
- Payment Instructions. Describe how payment is to be made. Payment shall be made with certified funds or wire transfer (instructions included).
- Agreement to Forego Threatened Litigation. Describe a condition of the Settlement Agreement. Both Parties hereto agree forever forego any of the threatened litigation purposed in Attachment One or Attachment Two.
- Agreement About the Items in Dispute. Describe what happens to the items in dispute. Party Two agrees that all merchandise in dispute shall be solely, wholly, and unequivocal owned by Party One. Additionally, Party One shall have the full rights, authority, and authorization to utilize, free of charge, the marketing material created by Party Two.
- Confidentiality and Non-disparagement. Describe with particular details about what should be kept confidential. The Parties and their spouses shall not communicate, reveal, or disclose the contents of this Agreement to any other person or entity without prior written authorization of the other Party, except that the Parties may communicate and disclose such information to the extent necessary: (i) to obtain professional services; (ii) to respond to court order or subpoena; or (iii) to enforce or comply this Agreement. Notwithstanding the foregoing, the Parties and their spouses are free to communicate to any third party that the Dispute was resolved on confidential terms that were mutually acceptable to both sides. The Parties shall not make or publish any out-of-court statement disparaging the other’s businesses. Notwithstanding the foregoing, no statement shall be considered disparaging under this provision so long as the statement does not refer to the other Party by name or the other Party’s companies, products, or services.
- Party One Release. Party One, on behalf of itself and its officers, managers, and owners, hereby releases, acquits, and forever discharges Party Two, including its subsidiaries and affiliated companies or corporations, and each and every one of their respective predecessors, successors, assigns, subsidiaries, affiliates, officers, directors, employees, agents, attorneys, and independent contractors (collectively, the “Party Two Released Parties”), of and from any and all claims, controversies, actions, demands, causes of action, or liability of every kind and description, known or unknown, at law or in equity, which it had in the past, now has, or may hereafter have against Party Two arising out of any matter, including, but not limited to, the Dispute.
- Party Two Release. Party Two, on behalf of itself and its officers, managers, and owners, does hereby release, acquit, and forever discharge Party One, including its subsidiaries and affiliated companies or corporations, and each and every one of their respective predecessors, successors, assigns, subsidiaries, affiliates, officers, directors, employees, agents, attorneys, and independent contractors (collectively, the “Party One Released Parties”), of and from any and all claims, controversies, actions, demands, causes of action, or liability of every kind and description, known or unknown, at law or in equity, which it had in the past, now has, or may hereafter have against Party One arising out of any matter, including, but not limited to, the Dispute.
- Individual Consent. By their signatures below, Business Owner One and Business Owner Two, each in their individual capacity, consent to and authorize the transactions contemplated hereby, agree and consent to the terms, releases, and settlement herein.
- No Wrongdoing. The Parties agree that neither Party hereto is admitting any liability or wrongdoing whatsoever by reason of the matters mentioned herein, liability therefore being specifically denied and that this Settlement Agreement is being made purely upon a compromise basis so that the Parties might avoid further litigation. This Agreement does not constitute and may not be used or referred to in any proceeding or in any context as an admission or evidence of alleged liability or wrongdoing on the part of any Parties to this Agreement.
- No Reliance. Each Party has retained legal counsel of their choosing and has been adequately and fairly represented in connection in all matters relating to this Settlement Agreement. The Parties hereby expressly disclaim reliance upon any facts, promises, undertakings, or representations made by any other Party or any other Party’s attorney regarding the subject matter of this Settlement Agreement. The Parties agrees that the terms of this Settlement Agreement are fair, reasonable, and supported by good, valid, and adequate consideration
- Authority. Each Party executing this Settlement Agreement has the requisite authority, capacity and/or to do so.
- BOILERPLATE. Insert Boilerplate Language as Appropriate.
Party One, LLC
By: Business One Owner
Title: Member / Manager / President
Party Two, LLC
By: Business Two Owner
Title: Member / Manager / President
I would HIGHLY encourage you to engage an attorney to help you draft any settlement agreement, or conversely, to consult with one prior to signing one presented to you. By signing a settlement agreement, you are effectively signing away your rights to have the dispute come to a resolution in a court of law. If you don’t fully understand what you are agreeing to, you could inadvertently dispose of your rights to remedy (or be left with an unsatisfactory outcome), and be without any additional recourse.