Most civil court cases are settled prior to trial. The specific terms of most settlements are embodied in a legally binding contract that specifies the terms and conditions of the parties' agreement. A breach of settlement occurs when one of the parties fails to abide by the stipulations of the settlement agreement.
Function
A settlement agreement is an acknowledgment by both parties to a pending court case that it is in their best interests to settle the matter rather than continue with litigation.
Features
Most settlements in civil cases require that a defendant pay the plaintiff a specified sum of money either in a lump sum or over a period of time. A breach occurs when the defendant fails to promptly pay any sums due under the settlement agreement.
Read More: Definition of a Formal Settlement
Types
Some settlement agreements require one of the parties to perform or to refrain from certain activity. For example, in a trademark infringement case, a settlement agreement might require that the defendant stop using the trademark of the plaintiff.
Significance
Since a settlement agreement is a legally binding contract, the nonbreaching party may file an action in court to enforce the terms of the settlement agreement.
Considerations
Some settlement agreements provide that a nonbreaching party may obtain a judgment against the breaching party in court for either the balance of the money owed or adherence to the terms of the settlement agreement.