Settlement Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Settlement, written in plain English, along with examples of how it is used.

What is Settlement?

(n) Settlement is the process of reaching an amicable solution by the parties themselves without waiting for the completion of the legal process and judgment of the court.

History and Meaning of Settlement

Settlement is a legal term used to define the process of resolving a dispute or a legal case outside of court. This term refers to an agreement between the parties involved in the dispute to accept some kind of compensation or to take some additional steps to resolve the matter, rather than relying on a judgment in court. In some cases, settlements can be reached even before a complaint has been filed or served.

Settlement agreements are usually made with the help of a mediator or an attorney and can be a win-win situation for both parties involved. It helps resolve the legal matter quickly, without the need for a lengthy trial and also saves time and money for both parties.

Examples of Settlement

Here are a few examples of how the term settlement can be used in different contexts:

  • The parties involved in the dispute agreed to a settlement and signed a settlement agreement to resolve the matter out of court.
  • The insurance company offered a settlement to the victim of the car accident to avoid going to trial.
  • The class-action lawsuit was settled for $10 million after months of negotiations between the parties.
  • The parties in the divorce case reached a settlement regarding property distribution and child custody.

Legal Terms Similar to Settlement

Here are a few related legal terms to settlement:

  • Mediation: a process of conflict resolution in which a neutral third party (mediator) helps the parties involved in the dispute reach an agreement.
  • Arbitration: a process of settling a dispute outside of court, in which a neutral arbitrator hears both sides of the case and makes a decision that is binding on both parties.
  • Litigation: the process of taking legal action in a court of law to resolve a dispute or enforce a right.
  • Consent decree: a legal agreement between the parties involved in a lawsuit, which is then approved and entered by the court as a final judgment.
  • Judgment: a decision made by a court of law, which resolves a dispute and determines the rights and obligations of the parties involved.