Before you sign a settlement: five questions

Settlement is the most common ending to a business dispute, and often the best. But a signed settlement is usually final. These five questions are worth asking before you sign.

1. Does it cover everything?

List every claim, known and possible, that you have against the other side. Check that the agreement releases them, and only them. If it releases claims you have not thought about, ask why.

2. What do I give up that is not money?

Confidentiality clauses, non-disparagement, restrictive covenants and references are all negotiable. They often matter more to the people involved than the headline sum.

3. How and when will I be paid?

A large figure paid in instalments over three years, with no security, is worth less than it appears. Ask what happens if a payment is missed, and who bears the cost of collecting.

4. What happens if the other side breaks the agreement?

Good settlement agreements say what the remedy is. A consent order, interest on late payment and a defined default mechanism are far cheaper than a second dispute.

5. Have I had time?

A genuinely fair offer survives a week of consideration. If you are told it expires tomorrow, ask for a day and get advice.

Behind the questions

The best settlements are ones both sides can describe in one sentence. If yours takes two pages to explain, it probably needs another draft.

This note is general information for business readers, not legal advice.