Settlement


“An agreement by which parties having disputed matters between them reach or ascertain what is coming from one to the other” (Black’s Law Dictionary). “The resolution of a dispute or lawsuit” (Nolo’s Dictionary). “An agreement that ends a dispute and results in the voluntary dismissal of any related litigation” (Cornell Law School). A settlement is reached when “parties to a lawsuit resolve their difference without having a trial….[and give up] their rights to pursue judicial remedies.”

Example Sentence

To avoid the courtroom, Mr. and Mrs. Brown accepted a settlement of $250,000 for the death of their child.

Case Study

A local business is being threatened with a lawsuit by a patron who took a nasty fall in their iced-over parking lot. Although the store’s owners do not believe themselves guilty of negligence, they fear that a trial would hurt their reputation in the community. To avoid the costs of court and possible publicity, they agree to cover the patron’s medical costs in a settlement.

Other Important Information

The two parties make a private agreement where the wrongdoer will make some kind of compensation for the harm done to the other. In the field of personal injury, settlements are usually decided between an insured person and her own insurance company or the wrongdoer’s. Settlements are generally preferable to litigation for both parties: Court costs run high, and the defendant is forced to accept guilt if he loses a lawsuit; whereas “[n]o settlement…is an admission…of the liability of the insured” (Utah Code). In most cases, the defendant party will negotiate willingly with the claimant in order to save money in the long run and to keep her record clean. A settlement is a binding agreement that provides security to both sides (even if one party dies in the course of negotiation). However, there are some circumstances under which settlements are not valid. For instance, the law does not tolerate any unfair claim settlement practice on the part of an insurer; and all settlements reached within 15 days of the incident in question may be voided within that same period of time or 15 days from their discharge from a hospital (whichever comes later). Utah Code also outlines unfair settlement practices that insurance companies cannot use, including misrepresenting the facts of the insurance policy or failing to promptly respond to communication from the person seeking an insurance claim. According to Rule 68 of Utah’s Rules of Civil Procedure (URCP), if the parties want to settle, one of them must offer it:

  1. In writing,
  2. With a reference to Rule 68, 
  3. 10 days before trial, and
  4. Leave it as an option for 10 days.

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