What is a Settlement and Release Agreement?

cartwrightlaw - January 9, 2023 -

Many car accident or other personal injury cases ultimately result in settlements because insurance companies for both sides will be reluctant to bear the expenses of taking cases to trial, and settlement agreements typically involve both parties signing a settlement and release agreement. The settlement and release agreement will effectively end a dispute and establish the terms the parties agree to, including payments.

It will be incredibly important to detail the claim that is being settled to release a party from liability, as releases may apply only to certain categories of claims. While parties who are defendants will certainly want to prevent all possible future litigation, some people may wish to preserve their rights to file additional claims. California Civil Code § 1542 establishes that a “general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

Discuss any settlement with a personal injury lawyer before you ever sign anything.

Elements of Settlement and Release Agreements

All settlement and release agreements need to be thoroughly examined to ensure that they are as complete as possible. In general, most settlement and release agreements will consist of the following sections:

Recitals — Recitals explain the facts of a dispute and establish that the parties involved have reached a settlement.
Representations and Warranties — Representations are statements of fact while warranties are promises of fact.
Indemnification — Indemnification involves one party compensating the other party for certain costs and expenses.
Mutual Releases — The mutual release makes both parties stop pursuing claims against one another.
Notice — Provide information about how any notices required under law will be delivered.
Entire Agreement — Entire agreement clauses often try to exclude representations and statements either party makes that could have been relied on by the parties when entering into the contract but were not expressly incorporated into the contract.
Governing Law, Venue, and Jurisdiction — This section determines which state law will be used to settle a dispute and where the dispute will be resolved.
Counterparts — The counterparts section relates to each party needing to sing identical but different copies of the same contract.
Headings — The parties can agree that descriptive headings are for convenience only and do not control or affect the meaning or construction of any provisions of an agreement.
Interpretations — This section will provide that the agreement cannot be construed more strictly against either party.
Attorney’s Fees — When either party needs to institute a legal action to enforce any provision of an agreement, they can be entitled to recover all costs and reasonable attorney’s fees.
No Admission of Liability — The agreement is considered a compromise of claims and thus, cannot be construed as an admission by any party of liability.
Non-Disparagement By Parties — The parties agree not to disparage one another following settlement.

Releasing Claims

Liability waiver forms or releases of claims allow one party a release from liability and having to pay additional claims. Any release will need to include an identification of all the parties involved, details about an accident, a person’s injury claims, details of the proposed payment, and the governing law and enforceability of the agreement.

In most agreements, the injured party is known as the releasor while the at-fault party is the release. There will usually be a release of an obligation to pay, meaning that an injured party will not receive any more payments from the at-fault party.

The injured party signing the settlement and release agreement will be forfeiting their right to sue the other party. The negligent party will also want to include language indicating that they are not admitting any fault relating to an accident as part of their settling the claim.

In October 2021, California Governor Gavin Newsom signed Senate Bill 331 (SB 331 or the “Silenced No More Act”) and placed multiple restrictions on settlement agreements, non-disparagement agreements and separation agreements. Additional measures signed by Newsom in recent years have included SB 1431, SB 820, SB 1300, Assembly Bill 740 (AB 749), and AB 2143.

Important Questions About Settlement and Release Agreements

When people are negotiating settlement and release agreements, they will want to be sure they employ legal representation that understands how serious these agreements can be. An experienced lawyer will know how to achieve the most beneficial agreement in your circumstances.

One major concern needs to be whether a person wants to get a broad or narrow release of claims. In addition to considering whether an agreement will relate to pending litigation or arbitration, there can also be instances of claims related to particular agreements, claims arising out of certain events, or claims relating to a relationship between parties.

People also need to consider whether they want to release another party from unknown claims, as some issues can arise later. There can also be concerns about which parties are subject to a settlement and release agreement, as some people may want to include representatives, agents, or other related parties.

The date of a settlement payment will also be a major concern, as will be confidentiality terms relating to a settlement and release agreement. A settlement agreement often includes a provision explaining confidentiality obligations and parties usually agree to keep the terms of a settlement confidential, but parties may wish to share the existence of a settlement agreement.

Call Us Today to Schedule a Free Consultation with a Bay Area Personal Injury Attorney

If you are in the process of trying to negotiate a settlement to a personal injury claim in California, you are going to want to be sure that you retain legal counsel so you can have the best possible chance of recovering all of the compensation that you need and deserve. The Cartwright Law Firm, Inc. has offices in San Francisco, Vacaville, Discovery Bay, and Santa Rosa, and we respond to phone calls 24 hours a day, seven days a week.

Our firm has a wealth of experience in personal injury matters, and we begin by conducting independent investigations of accident scenes before calculating possible damages and then negotiating with insurance companies to achieve fair and full settlements. You can call (415) 851-6486 or contact us online to receive a free consultation with our Bay Area personal injury attorney.

Discuss any settlement with a personal injury lawyer before you ever sign anything.

Elements of Settlement and Release Agreements

Recitals — Recitals explain the facts of a dispute and establish that the parties involved have reached a settlement.
Representations and Warranties — Representations are statements of fact while warranties are promises of fact.
Indemnification — Indemnification involves one party compensating the other party for certain costs and expenses.
Mutual Releases — The mutual release makes both parties stop pursuing claims against one another.
Notice — Provide information about how any notices required under law will be delivered.
Entire Agreement — Entire agreement clauses often try to exclude representations and statements either party makes that could have been relied on by the parties when entering into the contract but were not expressly incorporated into the contract.
Governing Law, Venue, and Jurisdiction — This section determines which state law will be used to settle a dispute and where the dispute will be resolved.
Counterparts — The counterparts section relates to each party needing to sing identical but different copies of the same contract.
Headings — The parties can agree that descriptive headings are for convenience only and do not control or affect the meaning or construction of any provisions of an agreement.
Interpretations — This section will provide that the agreement cannot be construed more strictly against either party.
Attorney’s Fees — When either party needs to institute a legal action to enforce any provision of an agreement, they can be entitled to recover all costs and reasonable attorney’s fees.
No Admission of Liability — The agreement is considered a compromise of claims and thus, cannot be construed as an admission by any party of liability.
Non-Disparagement By Parties — The parties agree not to disparage one another following settlement.

Releasing Claims

Important Questions About Settlement and Release Agreements

Call Us Today to Schedule a Free Consultation with a Bay Area Personal Injury Attorney

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Our successful case results are a reflection of the values and virtues we believe in and uphold at Cartwright Law Firm. Nothing stops us from pursuing justice on behalf of those who need it.

Robert E. Cartwright Jr.
Founder and Managing Partner