Q&As

In a settlement agreement can the termination date be later than the date of the settlement agreement?

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Published on LexisPSL on 13/08/2019

The following Dispute Resolution Q&A provides comprehensive and up to date legal information covering:

  • In a settlement agreement can the termination date be later than the date of the settlement agreement?
  • The ‘Effective Date’
  • General release of all claims
  • Disposing of the proceedings
  • Discontinuance
  • Consent order
  • Tomlin order
  • Further reading

In a settlement agreement can the termination date be later than the date of the settlement agreement?

This Q&A assumes that termination refers to settlement in the context of proceedings that have already been issued and in particular when those proceedings will be considered to have been brought to an end.

The effect of a settlement agreement is that it will be binding on the parties in accordance with its terms and its scope. Depending on what has been drafted, the effect of a settlement agreement on litigation can be far reaching. For example, a settlement agreement can:

  1. result in the estoppel and release of proposed or continuing claims

  2. prevent further litigation

  3. preserve future claims (via carves out in the settlement agreement)

  4. bind third parties

  5. release fraud-based claims

For more information on the effects of settlement agreements, see Practice Note: Settlement agreements—the effect on litigation.

The ‘Effective Date’

In a settlement agreement, the ‘Effective Date’ or ‘Commencement Date’ is the date defined in the agreement upon which the agreement comes into effect between the parties. It is not necessarily the date of the signature. By defining the date, the actual date of signature may not necessarily coincide. It is possible for the Effective Date to be retrospective.

General release of all claims

In the context of proposed or continuing litigation, the release clause in the settlement agreement operates whereby one party

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