If companies decide to resolve the issues by mutual agreement, the settlement agreement should accurately reflect the compromise reached by the parties. Too often, the focus is solely on the amount to be paid in exchange for the release of duties, but there are other, equally important, considerations that need to be addressed. It is also important to specify in the settlement agreement whether the release of mutual claims takes place. For example, if only one party has asserted claims in pending cases, you might want the settlement agreement to disclose not only the rights invoked in the dispute, but also any claims the defendant might have in connection with the same underlying events. The parties should carefully consider the claims they wish to disclose as part of a settlement agreement and whether the language of the settlement agreement covers those specific claims. Shares can cover different categories of claims, including: If you are the defendant, make sure that all related companies of the counterparty are covered by the unlocking of claims in order to expand the scope of the agreement. However, even if you are able to assert your rights, you may be willing to include such a provision if none of your affiliates had a viable right in all cases. Most disputes are settled, so it`s important for legal teams to be aware of the most important issues when developing a settlement agreement. This is especially true now that businesses around the world are facing the COVID-19 pandemic and the resulting burden on supply chains and business relationships. For example, California Civil Code Section 1542 provides that a general release of claims does not extend to claims that the released party „does not know or suspect exist“ at the time of release and that, if known, „would have had a significant impact“ on the comparison. If your settlement agreement is governed by California law or has another connection to California, there must be a provision stating that the parties agree to waive Section 1542 to release unknown claims.
The transaction agreement must specify the date of a possible settlement, any conditions precedent for payment and the method of transfer of this payment. Other considerations relate to whether you wish to assign the right to receive payment to related undertakings and, if so, whether such transfer can take place with or without the agreement of the other party. . . .