Settlement agreement: to end or prevent disputes

Settlement agreement: to end or prevent disputes

When two parties disagree on a certain subject they can always go to court to let a judge decide on the matter. The judge lays down his ruling in a decision which will be binding upon both parties. If parties would like to prevent going to court but still wish to settle their dispute or prevent a future dispute, drawing up a settlement agreement might offer the solution. Dutch contract lawyer Marco Guit explains. 

 

 

Settlement agreement: a binding agreement to settle or prevent any dispute

In a settlement agreement, parties settle a dispute and lay down facts that might cause future uncertainty or conflicts. This agreement will be binding upon parties

When two parties disagree on a certain subject they can always go to court to let a judge decide on the matter. The judge lays down his ruling in a decision which will be binding upon both parties. If parties would like to prevent going to court but still wish to settle their dispute or prevent a future dispute, drawing up a settlement agreement might offer the solution.

Binding agreement to settle dispute

In a settlement agreement parties settle a dispute and lay down facts that might cause future uncertainty or conflicts. This agreement will be binding upon parties as if it were a court decision. Although a settlement agreement cannot be enforced as such, the court must, as a basic rule accept the binding nature of the settlement agreement and cannot easily set it aside. Therefore, it usually is easy to obtain an order to comply with a settlement agreement from the preliminary relief judge. Direct enforceability of a settlement agreement can also be reached if it is converted to a notarial deed.

Acknowledgement of debt is settlement agreement

In litigation that ended in a recent judgment, the court had to decide whether a deed of acknowledgement of debt could be qualified as a settlement agreement. This is the case if –in short- the two following criteria are met:

  1. By drawing up the relevant document parties anticipated to end an existing dispute (or prevent one), and
  2. both parties are bound by the content of the agreement.

As these criteria were met in this case, the court ruled that the deed was a settlement agreement.

Reticent attitude judges in overruling settlement agreements

In the aforementioned case, the defendant claimed furthermore that the settlement agreement did not reflect her true intentions and that she was not aware of the consequences of the contract. Beside the fact that defendant did not come across particularly convincing, the court also stated that judges in general should adopt a reticent attitude when overruling settlement agreements, seeing that the intention of a settlement agreement is precisely to terminate or prevent discussion and uncertainty about risen issues. If these same issues could be up for debate again in court, the settlement agreement will lose much of its relevance. Therefore, the court dismissed the defendant’s claim that the contract was entered under the influence of error.

Dutch Law Firm in settlement agreements

Law Firm AMS is based in Amsterdam, the Netherlands. Various matters can be laid down in settlement agreements. It is necessary though that both parties intend to end a dispute with the agreement. Our lawyers have great experience in drawing up and negotiating settlement agreements. Should you have any question with respect to settlement agreements in The Netherlands, please feel free to contact our law firm.

Marco Guit - Advocatenkantoor AMS Advocaten
Marco Guit Marco is generally described by his clients as motivated and solution-oriented. He advises – and, if necessary, litigates – mainly in the areas of corporate law, contract law, insolvency law, property law and construction law. Also follow Marco on Google or LinkedIn. Marco is available via e-mail and +31 (0)20-3080315.
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