Like snowflakes, business disputes are not identical; however, the desire to settle them is a common objective to be shared by all involved parties. This article will discuss how to finalize a settlement that, if necessary, is enforceable in court.
Two documents that should be part of any settlement are (a) a settlement agreement, and (b) a general release, either corporate or individual, depending upon the capacity of the party executing the release.
The settlement agreement should (i) identify the parties to the agreement, as well as recite (ii) the details of the dispute as alleged by each party and (iii) the fact that the parties now desire to settle and resolve their differences. Following the recitation of the parties and the facts leading up to the settlement, the agreement should (iv) describe the conditions of the settlement; e.g., payment by a date certain or in installments, or the performance of some specified activity by a date certain.
It is also highly recommended that (v) a provision for venue (where an action for breach of the settlement agreement can be maintained) be included, so as to avoid the inconvenience of enforcing a subsequent breach of the settlement agreement in a distant forum. This provision should also include language that each party agrees and consents to the jurisdiction of the courts where the agreed upon venue is located; i.e., if venue is located in Cook County, Illinois, each party consents to jurisdiction of any court located in that county. It is also helpful to include (vi) language that the settlement agreement is a final, binding agreement that supercedes any prior written or oral understanding. Finally, the parties may desire to keep the terms of the settlement confidential and, in that event, (vii) a provision of confidentiality should also be included into the agreement. Once the involved parties have agreed upon the terms and conditions of the settlement, each party should be required to sign the settlement agreement before a notary public. It is important that an authorized officer sign the agreement when the dispute involves a legitimate business entity; conversely, when the dispute involves an individual, the signature of the individual is needed.
A written release may be also be used as an additional part of the settlement, although it does not have to be part of, or even mentioned in, the settlement agreement. Indeed, the better practice is to have the release(s) either executed after the parties have fully complied with the terms and obligations of the settlement agreement, or to have fully executed releases held in escrow pending satisfactory completion of the settlement agreement. General releases can be downloaded from the Internet (e.g., www.releaseforms.us). With respect to general corporate releases, it is important that the release is signed by an authorized officer, before a notary public. Similarly, a general release relating to an individual must be signed by the named individual before a notary public.