Settlement Definition

Settlement in legal terms refers to when parties to a lawsuit resolve their difference without having a trial. Settlements are negotiated by their parties, usually through their attorneys and/or insurance adjusters, but final approval of a settlement offer must rest with the parties to the lawsuit. A settlement reached just before trial or after a trial or hearing has begun is often "read into the record" and approved by the court so that it can be enforced as a judgment if the terms of the settlement are not complied with. Many states require a settlement conference a few weeks before trial in an effort to achieve settlement with a judge or assigned attorneys to facilitate the process. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims. The settlement agreement in a civil lawsuit is the document that spells out the terms of an out-of-court compromise.

Out of court settlement or negotiated settlement is the resolution of a dispute initiated and completed outside of the formal judicial process, without judicial intervention, supervision, or approval. An out-of-court settlement provides that the parties relinquish their rights to pursue judicial remedies.