compromise and settlement – a compromise agreement followed by the performance of the promises contained in the agreement

     This page is continued from Civil Law Self-Help >>>> § 3 Which Form(s) of Relief are you seeking to Remedy the Situation? >>> Damages >>>> General Legal Terms:


compromise and settlement:

1. 1. An agreement between two or more persons to settle matters in dispute between them; an agreement for the settlement of a real or supposed claim in which each party surrenders somethings in concession to the other. — aka compromise.  See COMPOSITION (1). [1]

1. A compromise agreement followed by the performance of the promises contained in the agreement.  15 Am J2d Compr § 1. [2]

1. An agreement to settle a dispute, followed by performance of the promises contained in the agreement. [3]

     Excerpt from Represent Yourself in Court; How to Prepare & Try a Winning Case (7th ed.) by by Paul Bergman and Sara J. Berman (NOLO):

     “Informal estimates are that around 90% of cases filed in court wind up being settled rather than resolved by the verdict of a judge or jury.  This conventional wisdom is reinforced by a recent study led by Jonathan Hyman for the New Jersey Administrative Office of the Courts.  Not only did just 10% of all the cases in the New Jersey sample go to trial but 12% of these cases settled after a trial had started.  Thus, the Hyman study also confirmed another basic truth ab out litigation:  its never too late to settle.

     Settlement is a popular option for a number of reasons:

  • As a plaintiff, you can take advantage of the time value of money.  The dollar you get by settling now could be more valuable than the two dollars you may get years down the road.
  • If you are self-represented, no matter whether you a re a plaintiff or a defendant, the biggest benefit fo settlement can be extricating yourself from a complex and often alien and hostile legal system.  Also, you can save yourself the hundreds of hours you may otherwise have to spend doing legal research, talking to witnesses, gathering documents, engaging in numerous other case-related activities, and ultimately going to court.
  • Settlement affords both plaintiffs and defendants the certainty of a known result.  By comparison, the outcome of a trial is always in doubt.  (Lawyers are fond of referring to trial as a “crapshoot.”)  Event the most solid case can occasionally succumb to such factors as lost exhibits, disappearing or forgetful witnesses, a hostile judge, or a rogue jury.
  • Settling often allows both sides to tailor the outcome to meet their specific needs.  For example, if a business dispute goes to trial, a judge may be limited to awarding the plaintiff money damages that the defendant cannot pay.  By settling, the parties might structure future dealings in such a way that the plaintiff is paid off over time or is guaranteed future contracts that more than make up for the money the plaintiff lost. 

EXAMPLE: Daniel and Julia see and orange on he sidewalk.  When both lunge for it, a nasty argument ensues.  In court, a judge would probably have to aware the entire orange to Daniel or Julia according to a legal rule — perhaps to the one who saw it first.  However, in settlement discussions the parties might realize that Daniel wants the orange tuse its peel in a recipe, while Julia wants it only for the pulp to make orange juice.  in short, the orange can be divided so that both parties get what they want.  in this way, a settlement can produce a mutually satisfactory “win-win” outcome that the legal system could not….

     Because every case that settles is one fewer that the formal legal system has to find time and room for, legislators and judges think that settlement is also in the best interests fo the legal system.  After a complaint and answer are filed and before a case goes to trial, you will inevitably encounter judges, backed by court rules and procedures, encouraging you to consider settlement….

Try Settling Before Litigation:

     Waiting to try and resolve a dispute until after court papers have been filed ordinarily makes little sense.  People should — and most probably do — attempt to settle their arguments before going to court.  in fact, filing and serving a complaint is often proof that these early settlement efforts have failed.  Paradoxically, a complaint itself can often serve as a settlement device in the sense that is represents one side telling the other, “I mean business, and you’d better be willing to compromise if you want to avoid a long and nasty fight.”

     There’s no real downside to trying to settle, either.  Your adversary isn’t allowed to present evidence at trial about any compromise offers you make during settlement negotiations.

     One way to achieve a fair and effective settlement before goign to (or being dragged into) court is to employ techniques known collectively as “alternative dispute resolution,” or “ADR.”  Prominent among these techniques are negotiation (trying to resolve a dispute by talking to another person face to face) and mediation (trying to trying to resolve a dispute with the help of a neutral third-party mediator)….

Court-Ordered Mediation:

     Mediation is a descendant of dispute resolution methods used by village or tribal elders in ancient times.  In mediation, you discuss a dispute with your opponent and a neutral, usually professionally trained, third person called a mediator.  The mediator’s role is to facilitate discussion, help the parties focus on concrete issues and create and evaluate settlement proposals, and, if the process gets that far, help the parties craft a written settlement agreement.  A mediator has no power to impose a solution.  Because mediation so often produce settlements, courts in many localities require parties in some kinds of cases to go through mediation before their cases can proceed towards trial. (This is often called “judicial” mediation.)

     Every state sponsors low-cost, voluntary, community-based mediation programs in specific fields, usually including neighbor disputes, consumer problems, landlord-tenan t problems, and child custody and visitation disputes.  In addition, many mediators who specialize in divorce and business disputes practice privately.  The upshot is that mediation is so widelyavailable that, one way or the other, you may well have voluntarily particpated in a mediation before going (or being taken) to court.  Wheher or not this is true, if you find yourself in small claims court, ind a child custody dispute, or in a case involving what the courts consider a small amount of money (often, $50,000 or less), a judge is likely to suggest strongly or even order you and your opponent to try mediation.  Of course, if mediation does not produce a settlement, your case continues on through the court system.

     The American Arbitration Association (, to which many mediators belong, states that “in most cases mediation results in a settlement.”  Other mediation groups generally concur.  Because it is quite likely that you will resolve your dispute with a mediated settlement and not a court judgment, you’ll obviously want to guard against disadvantageous result by preparing carefully for mediation.  The following tips should help you achive a satisfactory mediated settlement:

  • Understand the process. You will be attempting to resolve the case with your opponent personally, even if your opponent is represented by a lawyer. (Lawyers sometimes attend mediations, but only to counsel clients and facilitate the discussion.)  However recognize that a representative of a business or other large organization is likely to have prior mediation experience, will be savvy about and at ease with the process, and may be a lawyer to boot…. 
  • Think in advance about what outcomes you would find acceptable.  Though a mediator may suggest ideas you haven’t considered, getting a head start on your thinking can help you evaluate new proposals.  While you want to keep an open mind, it is particularly important that you think in advance about an acceptable bottom-line compromise position so that you don’t find yourself conceding too much. 
  • Bring documents and other exhibits supporting your legal claim.  Even though no judge or jury is present to declare a winner or loser, tangible objects lend force to your points and provide you with psychological support.
  • Remember the goal. The idea behind mediation is not to produce winners and losers but to find solutions — often creative ones beyond the power of a judge to order — that meet both parties’ real needs (but not always their fondest wants or expectations)….

     A judge often has the power to order mediation of any civil lawsuit involving less than $50,000 and of all child custody and visitation disputes.  The parties usually have a chance to agree on a mediator of their choosing, but in some instances the judge simply appoints one from a panel of available mediators.  When a judge orders the parties to mediate, the mediator’s fees are paid by the court.  And mediations are more informal than trials; they take place in office settings, not in courtrooms, and operate without regard to evidence rules.  Disputants are therefore free to say whatever they want and to back it up without whatever information they consider important….

     A judge can stop a hearing and send the parties to mediate a single issue and then return to the courtroom.  some courthouses have mediators on site who are available on an “on-call” basis to handle such matters.  you will not get to choose the mediator, and the mediation will not cover the whole case — just the single issue that is hanging things up.  You will not have to pay for the mediator.  typically, the mediator is either paid by the court or is a volunteer.

EXAMPLE: Hilary has invested $20,000 to become a partner in a bagel/flower shop business started by Skye.  Hilary asks for her money back after becoming convinced that Skye seriously understated the level of local competition.  When Skye refuses, Hilary sues Skye for fraud and breach of contract; Skye denies Hilary’s allegations.  At an early stage of the litigation a judge orders the parties to try mediation.  During mediation, Hilary refers to “reliable rumors I’ve heard about the national bagel chain’s plan to open a couple of nearby outlets int he next few months.”  In a trial, a judge would probably rule that  Hilary’s reference to rumors (no matter how “reliable”) is inadmissible on the grounds of vagueness and hearsay.  However, Hilary is entirely free to talk about rumors in mediation, and her statements have as much force as Skye and the mediator are willing to give them.

     If mediation doesn’t produce a settlement — and remember that neither a mediator nor a judge can force you to accept a mediated solution — your case proceeds to trial.  Nothing you or anybody else says during mediation is admissible as evidence at trial.  For example, your opponent can’t testify that during the mediation you admitted that “I might have been driving a few miles over the speed limit.” 

     To help you understand how mediation works, consider how the mediation in Hilary’s and Skye’s dispute might unfold….  Depending on the complexity of a dispute and the attitudes of the parties, the stages described below may be completed in an hour or two, or they may continue over several days . But no matter how long it lasts, the mediation is likely to proceed as follows:

Stage 1:  The mediator reviews the goals and rules of mediation with the parties and encourages the parties to work cooperatively toward a settlement. For instance, a mediator might tell Hilary and Skye, “I encourage each of you to be honest with the other and to make your best effort at reaching an agreement.  I won’t take sides, and I’ll keep everything you say confidential.”

Stage 2:  Each side has an uninterrupted chance to describe that party’s view of what the argument is all about and to offer possible solutions.  For example, Hilary and Skye in turn could describe their understanding of the events, documents, and conversations leading up to the agreement.  They could then each discuss their perceptions of the level of competition the new business will face.  Finally, both could say how they want to resolve the dispute. Initially, for instance, Hilary might demand “my money back right now,” while Skye might say, “I want to keep Hilary’s money in the business for at least one year, but I am willing to sign a note promising to pay her back in a year with interest.”

Stage 3:  The mediator tries to get the parties to identify and agree on the issues that must be dealt with to resolve the dispute.  In this case, the mediator might identify “level of expected competition” and “duration of the partnership agreement” as issues that Hilary and Skye absolutely must discuss.

Stage 4:  The mediator meets privately (called “caucusing”) with each side to discuss the strengths and weaknesses of each person’s position and try to refine settlement ideas.  In a private caucus with Hilary, for example, the mediator might want to discuss her ability to prove Skye’s alleged misrepresentations and what information she might consider relevant to a decision to keep the partnership going.

Stage 5:   The mediator and the parties again meet all together to continue working toward a solution.  Sometimes the parties might find it best to agree to adjourn the mediation for a week or two so that they can seek out additional information.  When the mediation continues, all three will meet to see if settlement is a realistic possibility.

Stage 6:  Mediation ends with a resolution that is summarized in writing, or with a joint decision to return to the court system because agreement cannot be reached and further efforts to mediate would be futile.  In this case, one possible settlement would consist of Skye agreeing to increase Hilary’s interest in the partnership by 5% or 10% to compensate her for the unanticipated risk presented by additional competition.  Another possibility would be for the two parties to agree to change their merchandise mix to avoid head-to-head competition.  If an agreement is reached, the mediator would help the parties put it in writing, report back to the court, and file papers dismissing the case.

     The stages described above unfold when a mediator is thorough and the parties are relatively cooperative.  In a court-ordered mediation, when time may be short and one or both parties may not want to mediate, the process may be quite different-but an agreement may well result anyway.

Court-Ordered Arbitration:

     Many states give judges a second way to resolve cases (involving less than $50,000 or so) without going to trial: court-ordered or “judicial” arbitration, a kind of informal trial. In states that authorize both court-ordered mediation and court-ordered arbitration, you’ll need to check your local court rules

to find out Whether you can have any inpur into which procedure a judge orders you to follow. If you and your opponent agree, it might even be possible for a judge to order that both procedures occur. That is, if court-ordered mediation fails to produce an agreement, you might ask the judge to order the case to arbitration.

Like mediation, arbitration is designed to be a less expensive alternative to resolving a dispute in court. However, arbitration is more like a trial than mediation is. That’s because in an arbitration you and your adversary present oral testimony, documents, and other tangible exhibits to a neutral third party (an arbitrator) who is empowered to make a decision, usually called an “award.” Arbitrators are professionally trained in arbitration procedures and are usually lawyers or retired judges. Most courts maintain panels of arbitrators; a judge will appoint one for your case. The arbitrator’s fee (often around $100 per case or hearing day) is paid by the court. (In some localities, parties whose cases involve too much money to be covered by court-ordered arbitration can request voluntary arbitration, in which case they pay the arbitrator’s fees themselves.)

     Arbitrations typically take place in the arbitrator’s conference room, and the arbitrator need not strictly abide by rules of evidence.  Moreover, an arbitrator can try to fashion an outcome that is fair, even if the outcome is different from what might happen in court.  After both parties have presented their evidence, the arbitrator will issue a written award deciding the case.

The arbitrator can make an award regardless of whether the parties agree with it, unlike in mediation.  However, an award resulting from court-ordered arbitration is ordinarily nonbinding.  That is, if you are not happy with the outcome of court-ordered arbitration, you can reject an arbitrator’s awared and insist that your case be returned to the court system….




n. (17c)

1. An agreement ending a dispute or lawsuit <the parties reached a settlement the day before trial>. — aka settlement agreement. [1]

1. The ending of a controversy by agreement.  The determination of an issue or of the correctness of an account.  the payment of an obligation.  The order made upon a trustee’s account, determining the among of the trust in the hands of the trustee and his liability therefor, decreeing distribution to the parties entitled thereto, and in the case of a continuing trust, re-awarding the body of the trust to the trustee for further administration. 54 Am J1st Trusts § 511.

An administrative  determination of the amount due from the United States upon a public contract.  Illinois Surety Co. v United States, 240 US 214, 221, 60 L Ed 609, 614, 36 S Ct 328.

The actual occupation of lands by a pre-emptor for the purpose of obtaining title thereto from the government. 42 Am J1st Pub L § 22. [2]

derivative settlement (18c) 1. The negotiated outcome of a derivative action.   See DERIVATIVE ACTION.  2. A person’s legal-residence status that is acquired though another person, as with a child through one or both parents.

final settlement – (17c) A court order discharging an executor’s duties after an estate’s execution.

full settlement (17c) A settlement and release of all pending claims between the parties.

judicial settlement – The settlement of a civil case with the help of a judge who is not assigned to adjudicate the dispute.  *  Parties sometimes find this procedure advantageous because it capitalizes on judicial experience in evaluating a claim’s settlement value.

mediated settlement agreement (1982) A settlement agreement arrived at through mediation.  Abbr. MSA.

nuisance settlement (1935) A settlement in which the defendant pays the plaintiff purely for economic reasons as opposed to any notion of responsibility because without the settlement the defendant would spend more money in legal fees and expenses caused by protracted litigation than in paying the settlement amount.  *  The money paid in such a settlement is often termed nuisance money.

out-of-court settlement (1930) The settlement and termination of a pending suit, arrived at without the court’s participation.

settlement offer See SETTLEMENT OFFER.

structured settlement (1978) A settlement in which the defendant agrees to pay periodic sums to the plaintiff for a specified time. [1]

     Excerpt from Alba Conte’s Attorney Fee Awards 5 2.31, at 101 (1993):

     “Especially in personal injury and product liability cases, structured settlements i.e., those which provide for an initial cash payment followed by deferred payments in future years, normally on some annuity basis are becoming more frequent. . . . Such a structured settlement may have advantages over a lump-sum cash payment. Deferred payments or arranged settlements may serve particular purposes that a cash settlement could not reach, and there will be instances when a structured settlement will be in lieu of an all-cash settlement that would not be acceptable to one party or the other.” [4]


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[1]: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black, Editor in Chief Bryan A. Garner. ISBN: 978-0-314-61300-4

[2]: Ballantine’s Law Dictionary with Pronunciations
Third Edition by James A. Ballantine (James Arthur 1871-1949).  Edited by William S. Anderson.  © 1969 by THE LAWYER’S CO-OPERATIVE PUBLISHING COMPANY.  Library of Congress Catalog Card No. 68-30931

[3]: Ballantine’s Law Dictionary Legal Assistant Edition by Jack Ballantine (James Arthur 1871-1949).  Doctored by Jack G. Handler, J.D. © 1994 Delmar by Thomson Learning.  ISBN 0-8273-4874-6.


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