Definition of a Formal Settlement

In a pending civil action, a settlement occurs when the parties to the dispute acknowledge that it is in their best interests to reconcile the matter without proceeding to trial.


A formal settlement is a legally binding written contract that incorporates the terms and conditions of the parties' agreement.

Remedies for Breach

Some formal settlement agreements contain a provision that allows the non-breaching party to obtain a judgment in an appropriate court for breach of the settlement contract.

Read More: What Is a Breach of Settlement?


In consideration for dismissing the underlying civil action, most formal settlement agreements obligate the defendant to pay a specified sum to the plaintiff. The settlement amount and the payment terms are incorporated in the formal settlement agreement.

Release of Liability

Most legal settlements include a release of liability provision. A release precludes the plaintiff from ever filing suit against the defendant for the same cause of action in the future.


Since a settlement precludes any further litigation, the parties usually will file a stipulation of dismissal in the court in which the civil action is pending. The dismissal ends the litigation by removing the matter from the court's docket.

Related Articles