Definition of a Formal Settlement

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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.

About the Author

John Barron started freelancing in 2008. Barron writes articles on topics including law, business and finance for various websites. He is an attorney with over 22 years experience in all phases of civil litigation, and corporate and securities law. Barron received a Bachelor of Arts in philosophy and political science from Boston University and a Juris Doctor from Suffolk University Law School.