Define: Out Of Court Settlement

An out-of-court settlement, also known as a settlement agreement or compromise agreement, is a resolution reached between parties to a legal dispute without the need for formal litigation or a trial. Instead of pursuing a lawsuit through the court system, the parties negotiate and agree upon terms to resolve their dispute outside of court. These agreements are often reached through negotiation, mediation, or arbitration, and they typically involve compromises and concessions by both sides to reach a mutually acceptable outcome. Out-of-court settlements can be advantageous for parties seeking to avoid the time, expense, and uncertainty of litigation, as well as the potential adverse publicity associated with a trial. Settlements may address various issues, such as payment of damages, termination of contracts, resolution of disputes, or other matters relevant to the underlying dispute. Once reached, out-of-court settlements are generally legally binding and enforceable, and they may include provisions for confidentiality and release of liability.

An out of court settlement is an agreement made out of court between the defendant and the plaintiff to resolve the dispute without a judge’s approval or “going to court.” Out of court settlements are very common in civil cases where the disputing parties are often asked to resolve their disputes through alternative conflict resolution methods such as mediation or arbitration.

Out of court settlements can provide compensation to the plaintiff which is similar to what they might have received if the case had gone to trial. Compensation can include lost wage compensation, payment for medical costs, and pain and suffering compensation.

An out of court settlement may allow a plaintiff to avoid a lengthy court battle, but in some cases, if an insurance company offers you an out of court settlement, they may not offer you enough money to fully compensate you for your injuries. If you are considering taking an out of court settlement, first talk to a lawyer.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March 2024.