How to ensure the validity of a settlement agreement?

 

What is a settlement agreement?

Settlement Agreement is basically a document which indicates the agreement between the parties therein connecting the parties to a settlement to adhere to the terms and conditions agreed as an outcome of negotiation between the parties.

Alike other contracts, the agreement need not always be in written version but however, it is better to make the agreement in written mode and sometimes it is mandatory to enforce it in a written format.

A settlement agreement is like any other contract is of no use to a party hoping to enforce it unless it is lawful. Settlement Agreement shall include all the necessary elements of a contract along with that it shall also include several other requirements in order to be valid as Settlement Agreement is a special type of Contract.

The necessary elements for a valid contract shall include an offer, acceptance, deliberation, the capacity of parties, the legality of subject matter, etc. Local laws, including a Statute of Frauds, may be an extra element based on the contract and subject matter. Hence while preparing a settlement agreement, since settlement agreement is a new type of contract for settlement agreement lawyers in London as it involves arguments which are already pending in the court of law, hence court also takes part in the settlement and has a view on the settlement agreement. Parties need the approval of a judge before the completion of a settlement agreement if in case parties are incapable or have an incapacity to entering into an agreement. In the Criminal and Anti-trust matters, requirements of a valid contract shall be met as it affects the large public. The true knowledge of the parties shall be covered in the settlement agreement. The provisions shall be precise and definite and it shall also include the subject matter of the dispute/settlement.

Traditional contract defenses apply to settlement agreements, and these must be taken into account during the negotiation and drafting of the agreement. The settlement agreement shall be considered invalid if a settlement is made through fraud or coercion. If in case of a settlement agreement is extreme one-sided then it may be considered as unconscionable.

Merely reaching an understanding or settlement is not enough. Legal formalities need to be checked to ensure the validity of the agreement. The Settlement agreement shall be signed by all the parties involved in it. A missing signature can easily become ground for stimulating the document in court at a later date. A settlement agreement may also be signed by 2 witnesses although not necessary.

After the signing of the agreement by the parties, the parties shall register the agreement if the subject matter of settlement is steady property. According to the Registration Act, a family settlement that purports to allocate immovable property must be mandatorily listed or the deed would be invalid. Stamp duty shall be levied on the agreement based on the value of the property.

A settlement agreement can also be defied in a court of law although it cannot be cancelled except with a court ruling. A settlement agreement can be challenged if it involves fraud or coercion, misrepresentation or improper implementation.