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What to look for when reviewing the settlement agreement

On Behalf of | Apr 19, 2021 | business litigation

In many cases, the resolution of a business lawsuit frequently ends in a settlement.

Regardless of how business owners approach resolving the legal dispute, the parties will lay out the terms of their resolution in a settlement agreement. California business owners should treat this document like they would any other agreement and must therefore make certain that it contains all the terms it needs, and resists terms that could be adverse to their business.


Many business owners want to put the legal dispute behind them, but they must take time to look over (or preferably have their attorney draft) the settlement agreement carefully.

There are three things that business owners should confirm in particular:

  1. The language is not ambiguous: Business owners should review the document’s language to make sure it does not include ambiguous statements. The agreement and settlement should be clear to both parties. In these cases, it is often beneficial for business owners to review the document with an experienced business attorney.
  2. The agreement addresses all legal claims: It is common for business owners to use a template to outline their settlement agreement. When this happens, they might lose track of the original claims during the negotiations. Business owners should make sure the settlement agreement discusses all of the relevant details of the claim.
  3. It clearly explains the terms of the settlement: Business owners must pay attention to detail when establishing the terms of the settlement. There can be a long list of terms. For example, many business owners include a confidentiality clause that prevents either party from discussing the matter or disclosing details. These terms may have a long-term effect on the business, so business owners must consider them carefully and ensure they are correct.

Generally, business owners can rely on their attorney to reduce risks and ensure the settlement agreement is fair and correct. However, it is still important for business owners to understand the important details their settlement agreement should include, so they can protect their business.