A settlement agreement ends a dispute without a trial. Because it usually releases your claims permanently, read it carefully before you sign.
Key terms
- The amount, due dates and payment method.
- A release of claims, which may be broad.
- Confidentiality and non-disparagement clauses.
- Whether either side admits fault.
- Dismissal of the lawsuit.
- What happens if someone breaks the agreement.
Taxes and liens
Some settlement payments are taxable. Medical providers, insurers or government programs may have claims on injury settlements, which can reduce what you receive. Ask a tax professional and your lawyer about these issues.
Negotiating tips
- Know your best and worst alternatives to settlement.
- Do not accept the first offer automatically.
- Get the agreement in writing, signed by all parties.
- Make sure the release matches what you intend to give up.
- Ask for payment security, such as a deadline or consent judgment.
After signing
Settlements are contracts and can be enforced in court. Keep a copy and calendar payment dates. If the other side does not pay, you may be able to enforce the agreement.
Frequently asked questions
Can I change my mind after signing?
Rarely. Some agreements have a short rescission window, but most are final.
Can a settlement be kept secret?
Often yes, but confidentiality cannot prevent you from reporting crimes or cooperating with agencies.