After you’ve settled a case and prepared the final settlement papers memorializing the agreement, all that’s left for the parties to do is execute that agreement. You’re close to the finish line—don’t slack off yet!
The final step in any settlement is for the parties to exchange the final settlement document (i.e., release or settlement agreement or both) and a dismissal of any claims reflected in the suit that’s being resolved and dismissed.
Here are the 4 keys to settlement agreement execution:
- Signatures. The settlement agreement should include signature lines for each party, with lines below each signature for the party’s name and affiliation to be printed legibly. The agreement should also provide lines for counsel to sign, indicating their approval of the document as to form. To be eligible for the summary enforcement procedures under CCP §664.6, a written settlement agreement must be signed by the parties themselves, not by their attorneys or representatives. Levy v Superior Court (1995) 10 C4th 578, 41 CR2d 878. In addition, all parties to the settlement must sign the agreement, not only those against whom enforcement is sought. Sully-Miller Const. Co. v Gledson/Cashman Const., Inc. (2002) 103 CA4th 30, 126 CR2d 400.
- Exchange. The simplest procedure for completing the settlement process is to have the final settlement document drafted to contemplate a “closing” by the simultaneous exchange between the releasing party (releasor), who delivers the signed release or settlement agreement with the fully executed dismissal (usually with prejudice), and the party being released (releasee), who delivers a check or other instrument representing payment of the monetary consideration. If simultaneous exchange isn’t practical, the settlement documentation may be executed at different times and in different locations by the parties.
- Mutual Settlement. Mutual settlement agreements are executory and contemplate that the parties have duties to be performed in the future, most commonly seen in the future obligation to pay.
- Court Approval. Settlement agreements entered into in certain types of actions are subject to court approval, e.g., class actions. When court approval is required, it’s generally sought after the parties have agreed to the settlement terms and executed the settlement documents. It’s also frequently recited in the agreement itself as a contingency that must be satisfied before the agreement can have full force and effect.
For everything you need to know about reaching, preparing, and executing settlement agreements, turn to CEB’s California Civil Procedure Before Trial, chap 46.
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