Settlement Deed – Things to Consider

A settlement deed is an agreement between two or more parties in which they resolve a dispute privately, without the need for a final judgement from a court or tribunal. The settlement deed sets the action required by the parties in order to resolve the dispute.  

Application for business people

Unfortunately, from time to time business people may find themselves involved in disputes with customers, employees, regulators or other companies.

Legal disputes can be very costly and time consuming for the parties involved. Legal fees and court costs add up, and the final judgement may be a serious financial burden, especially if one party is liable to pay the other’s costs. The heavy workload of courts also often means that cases may not be heard and decided for many months, or even years, after they begin. The ongoing uncertainty or an unresolved dispute can be extremely stressful for business people.

Another reason for business people to avoid litigation is that it is simply an unpleasant experience. The parties may be required to hand over a lot of sensitive commercial and personal information which they would prefer to remain private. Also, the litigation process may invite unwanted publicity for the business which may do serious damage to the company brand.

These are some of the reasons why entering into a settlement deed can be a wise course of action.

6 key things to consider

Settlement deeds generally take a lot of negotiation before they are acceptable to each party. Some of the key points to consider during this negotiation phase include:

  1. Is one party required to pay the other party a specified sum in order to settle the dispute? If so, what is the amount and what are the payment conditions?
  2. Is one party required to refrain from certain actions or change their behaviour to settle the dispute?
  3. If so, who exactly is covered by the settlement deed? For example, does it cover related entities and employees?
  4. What are the tax implications of the settlement payment, if any?
  5. Are there any confidentiality considerations?
  6. Who is responsible for costs?

You might also like:

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  3. Guide – Using Contract to Allocate Risk

Author

Joe Kafrouni
Legal Practitioner Director
Kafrouni Lawyers

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

Liability limited by a scheme approved under professional standards legislation.

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