Settlement (law)
Encyclopedia
In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins. The term "settlement" also has other meanings in the context of law.
between those parties, and is one possible (and common) result when parties sue
(or contemplate so doing) each other in civil
proceedings
. The plaintiff
(s) and defendant(s) identified in the lawsuit
can end the dispute between themselves without a trial
.
The contract is based upon the bargain that a party foregoes its ability to sue (if it has not sued already), or to continue with the claim (if the plaintiff has sued), in return for the certainty written into the settlement. The courts will enforce the settlement: if it is breached, the party in default could be sued for breach of that contract. In some jurisdictions, the party in default could also face the original action being restored.
The settlement of the lawsuit defines legal requirements of the parties, and is often put in force by an order of the court after a joint stipulation
by the parties. In other situations (as where the claims have been satisfied by the payment of a certain sum of money) the plaintiff and defendant can simply file a notice that the case has been dismissed.
The majority of cases are decided by a settlement. Both sides (regardless of relative monetary resources) often have a strong incentive to settle to avoid the costs (such as legal fees, finding expert witnesses, etc.), the time and the stress associated with a trial, particularly where a trial by jury is available. Generally, one side or the other will make a settlement offer
early in litigation. The parties may hold (and indeed, the court may require) a settlement conference
, at which they attempt to reach such a settlement.
In controversial cases, it may be written into a settlement that both sides keep its contents and all other information relevant to the case confidential, and/or that one of the parties (usually the one being sued) does not, by agreeing to the settlement, admit to any fault or wrongdoing in the underlying issue.
". This is done so that the court which was initially assigned the case may retain jurisdiction over it. The court is then free to modify its order as necessary to achieve justice in the case, and a party that breaches the settlement may be held in contempt of court
, rather than facing only a civil claim for the breach. In cases where confidentiality is required by the parties, the court order may refer to another document which is not disclosed, but which may be revealed to prove a breach of the settlement.
Confidentiality is not possible in class action
cases in the United States, where all settlements are subject to approval by the court pursuant to Rule 23 of the Federal Rules of Civil Procedure
and counterpart rules adopted in most states.
, if the matter is already before the courts, except in a case where the claim is to be dismissed outright and the Claimant agrees to pay the Defendant's costs, the matter is usually dealt with by a consent order, signed by the legal representatives of both parties and approved by the judge.
To get around the issue of confidentiality referred to above, a standard procedure consent order, known as a Tomlin Order
is entered into. The order itself contains an agreement that the claim is stayed
and no further action can be taken in court (except for referring a dispute in the implementation of the order to court, which is allowed). The order also deals with payment of costs, and payments of money out of court if any money is held by the court (as these are matters which must be dealt with by Court Order). However, the actual terms of the settlement are dealt with in a 'schedule' to the order, which can remain confidential. Breach of the schedule can be dealt with as breach of contract, or breach of the consent order.
matters, the closest parallel to a settlement is a plea bargain
, although this differs in several important respects, particularly the ability of the presiding judge to reject the terms of a settlement.
Basis
A settlement, as well as dealing with the dispute between the parties is a contractContract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
between those parties, and is one possible (and common) result when parties sue
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
(or contemplate so doing) each other in civil
Private law
Private law is that part of a civil law legal system which is part of the jus commune that involves relationships between individuals, such as the law of contracts or torts, as it is called in the common law, and the law of obligations as it is called in civilian legal systems...
proceedings
Proceedings
In academia, proceedings are the collection of academic papers that are published in the context of an academic conference. They are usually distributed as printed books either before the conference opens or after the conference has closed. Proceedings contain the contributions made by researchers...
. The plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
(s) and defendant(s) identified in the lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
can end the dispute between themselves without a trial
Trial (law)
In law, a trial is when parties to a dispute come together to present information in a tribunal, a formal setting with the authority to adjudicate claims or disputes. One form of tribunal is a court...
.
The contract is based upon the bargain that a party foregoes its ability to sue (if it has not sued already), or to continue with the claim (if the plaintiff has sued), in return for the certainty written into the settlement. The courts will enforce the settlement: if it is breached, the party in default could be sued for breach of that contract. In some jurisdictions, the party in default could also face the original action being restored.
The settlement of the lawsuit defines legal requirements of the parties, and is often put in force by an order of the court after a joint stipulation
Stipulation
In the law of the United States, a stipulation is an agreement made between opposing parties prior to a pending hearing or trial. For example, both parties might stipulate to certain facts, and therefore not have to argue those facts in court. After the stipulation is entered into, it is...
by the parties. In other situations (as where the claims have been satisfied by the payment of a certain sum of money) the plaintiff and defendant can simply file a notice that the case has been dismissed.
The majority of cases are decided by a settlement. Both sides (regardless of relative monetary resources) often have a strong incentive to settle to avoid the costs (such as legal fees, finding expert witnesses, etc.), the time and the stress associated with a trial, particularly where a trial by jury is available. Generally, one side or the other will make a settlement offer
Settlement offer
A settlement offer or offer to settle is a term used in a civil lawsuit to describe a communication from one party to the other suggesting a settlement - an agreement to end the lawsuit before a judgment is rendered....
early in litigation. The parties may hold (and indeed, the court may require) a settlement conference
Settlement conference
A settlement conference is a meeting between opposing sides of a lawsuit at which the parties attempt to reach a mutually agreeable resolution of their dispute without having to proceed to a trial. Such a conference may be initiated through either party, usually by the conveyance of a settlement...
, at which they attempt to reach such a settlement.
In controversial cases, it may be written into a settlement that both sides keep its contents and all other information relevant to the case confidential, and/or that one of the parties (usually the one being sued) does not, by agreeing to the settlement, admit to any fault or wrongdoing in the underlying issue.
United States
Generally, when a settlement is reached in the U.S., it will be submitted to the court to be "rolled into a court orderCourt order
A court order is an official proclamation by a judge that defines the legal relationships between the parties to a hearing, a trial, an appeal or other court proceedings. Such ruling requires or authorizes the carrying out of certain steps by one or more parties to a case...
". This is done so that the court which was initially assigned the case may retain jurisdiction over it. The court is then free to modify its order as necessary to achieve justice in the case, and a party that breaches the settlement may be held in contempt of court
Contempt of court
Contempt of court is a court order which, in the context of a court trial or hearing, declares a person or organization to have disobeyed or been disrespectful of the court's authority...
, rather than facing only a civil claim for the breach. In cases where confidentiality is required by the parties, the court order may refer to another document which is not disclosed, but which may be revealed to prove a breach of the settlement.
Confidentiality is not possible in class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
cases in the United States, where all settlements are subject to approval by the court pursuant to Rule 23 of the Federal Rules of Civil Procedure
Federal Rules of Civil Procedure
The Federal Rules of Civil Procedure govern civil procedure in United States district courts. The FRCP are promulgated by the United States Supreme Court pursuant to the Rules Enabling Act, and then the United States Congress has 7 months to veto the rules promulgated or they become part of the...
and counterpart rules adopted in most states.
England and Wales
In England and WalesEngland and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...
, if the matter is already before the courts, except in a case where the claim is to be dismissed outright and the Claimant agrees to pay the Defendant's costs, the matter is usually dealt with by a consent order, signed by the legal representatives of both parties and approved by the judge.
To get around the issue of confidentiality referred to above, a standard procedure consent order, known as a Tomlin Order
Tomlin order
A Tomlin order is a court order in the English civil justice system under which a court action is stayed, on terms which have been agreed in advance between the parties and which are included in a schedule to the order. As such, it is a form of consent order. The order permits either party to...
is entered into. The order itself contains an agreement that the claim is stayed
Stay of proceedings
A stay of proceedings is a ruling by the court in civil and criminal procedure, halting further legal process in a trial. The court can subsequently lift the stay and resume proceedings. However, a stay is sometimes used as a device to postpone proceedings indefinitely.-United Kingdom:In United...
and no further action can be taken in court (except for referring a dispute in the implementation of the order to court, which is allowed). The order also deals with payment of costs, and payments of money out of court if any money is held by the court (as these are matters which must be dealt with by Court Order). However, the actual terms of the settlement are dealt with in a 'schedule' to the order, which can remain confidential. Breach of the schedule can be dealt with as breach of contract, or breach of the consent order.
Israel
In Israel, which is a quasi-common law jurisdiction, settlements almost always are submitted to the court, for two reasons: (a) only by submitting the settlement to the court can the litigants control whether the court will order one or more parties to pay costs, and (b) the plaintiff (claimant) usually prefers for the settlement to be given the effect of a judgment.Criminal cases
In criminalCriminal law
Criminal law, is the body of law that relates to crime. It might be defined as the body of rules that defines conduct that is not allowed because it is held to threaten, harm or endanger the safety and welfare of people, and that sets out the punishment to be imposed on people who do not obey...
matters, the closest parallel to a settlement is a plea bargain
Plea bargain
A plea bargain is an agreement in a criminal case whereby the prosecutor offers the defendant the opportunity to plead guilty, usually to a lesser charge or to the original criminal charge with a recommendation of a lighter than the maximum sentence.A plea bargain allows criminal defendants to...
, although this differs in several important respects, particularly the ability of the presiding judge to reject the terms of a settlement.
External links
- Uri Weiss, The Regressive Effect of Legal Uncertainty http://law.bepress.com/cgi/viewcontent.cgi?article=1030&context=taulwps. Bepress.com