Settlement Agreement: How to ensure it is Binding
How do you ensure the settlement agreement is binding? If you find yourself in a dispute and have just completed a mediation with the other side, after hours of discussion, you have managed to reach an agreement. It is not everything you wanted, but you believe the outcome is workable and better than going to court. What next?
Following mediation, if a settlement is reached, the terms of the settlement will need to be put in writing in a formal Deed of Settlement. It is good practice for the basic skeleton of the agreement to be put in writing on the day of mediation, but it is usually not possible (or desirable) to complete a formal Deed of Settlement on the day of the mediation. This is because a Deed of Settlement is a substantial document, which takes careful consideration and time to draft properly.
At a minimum, the Deed of Settlement should cover the following areas:
- The terms of the settlement
- How and when any monies are to be paid
- The extent of the releases to be given (e.g. are the parties releasing each other from all legal claims that they may have against one another, or are there specific claims that are reserved?), and
- If Court proceedings are on foot, the Deed should state the steps that are required to bring the proceedings to an end.
Once the Deed of Settlement is prepared and all parties are in agreement, the parties will need to sign the Deed. At that point, the settlement agreement is binding on the parties and will be legally enforceable.
How Can DisputeOver Help?
The steps required to finalise an agreement reached at mediation need not be difficult, but it is important that they be done properly to ensure that your hard won agreement is legally binding.
If you are having a dispute or if you require a Deed of Settlement, please feel free to contact us on (03) 8561 3399 or complete the form below.