A legal settlement is an acknowledgment by parties to a civil court case that it is in their best interests to agree to settle the matter rather than face the inherent risks of proceeding to trial.
Function
In order to be binding, the terms and conditions of a legal settlement are usually incorporated into a formal written agreement signed by both parties.
Significance
Parties to a settlement agreement usually prepare a stipulation of dismissal for filing with the court in which the civil action is pending. This document removes the pending litigation from the court's docket.
Features
In consideration for dismissing the underlying court action, most legal settlements obligate one of the parties to pay a specified sum to the other. The payment amount and the manner in which it will be disbursed are elaborated in the formal settlement agreement.
Effects
Most legal settlements include a release of liability clause. A release precludes the party receiving a settlement payment from ever filing suit against the defendant for the same matter in the future.
Time Frame
A civil action can settle at any time between the filing of a complaint up to and including the day the case is scheduled for trial. In light of the posturing that normally occurs between parties prior to negotiation of a settlement agreement, it is not uncommon for a civil case to settle on the courthouse steps on the day of trial.
