Settling disputes—drafting the settlement agreement
Produced in partnership with Helen Swaffield of Contract Law Chambers
Settling disputes—drafting the settlement agreement

The following Dispute Resolution guidance note Produced in partnership with Helen Swaffield of Contract Law Chambers provides comprehensive and up to date legal information covering:

  • Settling disputes—drafting the settlement agreement
  • Key requirements—drafting the settlement contract
  • Drafting settlement agreements—consideration
  • Drafting settlement agreements—parties and authority
  • Drafting settlement agreements—the effective date
  • Drafting settlement agreements—the parties’ obligations
  • Drafting settlement agreements—the estoppel (the release of claims)
  • Drafting settlement agreements—boilerplate clauses
  • Drafting settlement agreements—warranties and indemnities
  • Drafting settlement agreements—disposing of the proceedings
  • more

This Practice Note considers the key issues when drafting a settlement agreement, including correct identification of the parties (including third parties as appropriate), setting out the parties’ obligations with sufficient certainty and compulsion (including time of the essence and ‘endeavours’ provisions), drafting the release (the ‘full and final settlement’ estoppel), the inclusion of relevant boilerplate provisions and execution formalities.

For guidance on making a settlement offer and determining how to document your settlement, see Practice Notes:

  1. Settling disputes—settlement offers (Calderbank, WPSAC and Part 36)

  2. Settling disputes—how to document a settlement

For Precedent draft settlement agreements, see:

  1. Draft Settlement agreement—pre-action settlement

  2. Draft Settlement agreement—for settling disputes post-commencement of proceedings

  3. Settlement agreement—short form payment and delivery of goods

Key requirements—drafting the settlement contract

As with any contract, there are a number of principles to be considered:

  1. consideration (unless executing as a deed)—see below

  2. parties to the agreement/deed—see below

  3. the effective date—see below

  4. the parties’ obligations—see below

  5. the estoppel (full and final settlement provisions)—see below

  6. the boilerplate clauses—see below

  7. the disposal of the proceedings—see below

  8. execution formalities—see below

Drafting settlement agreements—consideration

Unless the agreement is to be executed as a deed, you will need to ensure that it is supported by adequate consideration. It may be that such consideration is one or both party's agreement not to pursue their respective claims. The extent to