Settlement agreements serve as vital tools for resolving disputes and avoiding protracted litigation. Parties involved in a dispute often opt for settlement agreements to reach a mutually beneficial resolution, notwithstanding that these agreements could leave each party feeling a little sour as to the ultimate result. When one party fails to perform the terms of the settlement agreement, it can lead to a breach of the agreement.
Understanding Breach of Settlement Agreements
A breach of settlement agreement occurs when one of the parties involved fails to fulfill their obligations as stipulated in the agreement. This breach can take various forms, such as failure to make payments, provide goods or services, or adhere to any other terms outlined in the agreement, such as confidentiality, non-disclosure, or non-disparagement terms.
Rights and Remedies When There is a Breach
There are several legal options for parties facing a breach of settlement agreement. First, you must turn to the agreement itself and determine whether the agreement contemplates the rights and remedies of the non-breaching party in the face of a breach – can the non-breaching party file a lien on the disputed property? Can the non-breaching party file and enforce a judgment for an amount certain? What about injunctive relief? If the agreement is silent as to what happens when a breach is alleged, here are some of the common remedies sought:
- 1. Specific Performance: The non-breaching party may seek a court order requiring the breaching party to fulfill their obligations as originally agreed upon.
- 2. Monetary Damages: If financial losses have been incurred due to the breach, the non-breaching party can seek compensatory damages to cover these losses.
- 3. Injunctive Relief: In cases where monetary compensation is insufficient to remedy the breach, the court may issue an injunction to prevent the breaching party from further actions that exacerbate the situation and cause greater loss to the non-breaching party.
- 4. Rescission and Restitution: The court may void the settlement agreement, returning both parties to their pre-agreement positions if deemed appropriate.
- 5. Attorney Fees and Costs: Depending on the terms of the settlement agreement and applicable laws, the prevailing party may be entitled to recover attorney fees and litigation costs.
Mitigating Breach and Disputes Concerning the Settlement Terms
To minimize the risk of breach and potential disputes when crafting settlement agreements in New York, it is imperative to work with experienced legal counsel to ensure that all terms are accounted for, and to extent possible, future triggering events are contemplated and provided for. The best settlement agreements will provide clarity, ensuring that all terms, responsibilities, and expectations are clearly outlined in the agreement to prevent misinterpretations; and a mechanism for dispute resolution, perhaps one that require parties to attempt mediation or arbitration before resorting to litigation to promote quicker and cost-effective dispute resolution.
The breach of a settlement agreement can lead to further litigation, so each negotiation should be approached with foresight to ensure that all the material terms are detailed with specificity. When there is a breach, having an attorney to contact and begin prompt action will save time and could possibly protect the assets and/or recovery permissible under the settlement agreement and under law. It is critical to consult with experienced legal counsel to navigate settlement discussions, predict challenges that could arise, and craft binding, thorough agreements to protect the parties in their efforts to reach a resolution.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.
