Delaware Settlement Agreement

Introduction

Key Things to Know

1. 1

   A settlement agreement is a contract that ends a dispute, and because Delaware has not adopted a Section 1542-style statute, its release discharges only the claims its wording covers.

2. 2

   Delaware has adopted no counterpart to California Civil Code Section 1542, so a Delaware general release is read by its own language under common-law contract rules. Describe in the release whether it discharges only the known claims from the dispute or also unknown and unsuspected claims, because a Delaware court gives the release the reach its words state and no more.

3. 3

   If a minor is a party, the court approves the compromise of the minor's claim, and a guardian of the minor's property need not be appointed when the net funds go into a Uniform Transfers to Minors Act account or a court-approved annuity or structured instrument at or below the threshold fixed by court rule (Delaware Code Title 12 Section 3901; Superior Court Civil Rule 133).

4. 4

   Treat the release as a contract that needs consideration to hold. The settlement amount, or the mutual promises and releases the two sides make, ordinarily meets that need; describe what each party gives, since a release backed by nothing can be unenforceable because no consideration supports it.

5. 5

   A Delaware settlement can be confidential. Delaware has no statute that voids a confidentiality clause in a harassment or discrimination settlement, so the amount and the terms may generally be kept private. No clause, in any settlement, can stop a party from reporting suspected crime to law enforcement or cooperating with a government agency.

6. 6

   A no-admission-of-liability clause typically appears, stating that the payment settles a contested claim and admits no fault. Delaware enforces it, so a party may resolve the dispute without conceding wrongdoing.

7. 7

   A Delaware settlement is enforced like any other contract. If the dispute is already a pending case, present the settlement to the court; if a party breaks it, move to enforce it or sue for breach. Spell out in the Agreement the remedy for a missed payment.

Delaware Requirements for Settlement Agreement

• Release of Claims and Its Scope

  The release of claims is the heart of the settlement. Delaware has not enacted a statute like California Civil Code Section 1542, so a general release is read by common-law contract rules and covers only what its words say. State whether the release reaches only the known claims from the dispute or also unknown and unsuspected claims, and name who is released, because a Delaware court reads the release by its own terms.

• Court Approval for a Minor's Settlement

  If a party is a minor, the court approves the settlement of the minor's claim. A guardian of the minor's property need not be appointed when the net funds are placed in a UTMA account or a court-approved annuity or structured instrument at or below a threshold set by court rule (Delaware Code Title 12 Section 3901; Superior Court Civil Rule 133). Larger settlements require the court to direct how the funds are preserved.

• Consideration Makes the Release Binding

  A release is a contract, so it needs consideration to bind. The settlement payment, or the parties' mutual promises and mutual releases, usually supplies it. State plainly what each side gives in exchange for the release, because a release given for nothing in return can fail for lack of consideration under Delaware contract law.

• Confidentiality and Its Limits

  You can keep the settlement amount and terms confidential in Delaware. Unlike some states, Delaware has no statute that voids a confidentiality clause in a settlement of a harassment or discrimination claim, so a private settlement can generally stay private. One limit applies to any settlement: a confidentiality clause cannot bar a party from reporting suspected criminal conduct to law enforcement or cooperating with a government agency.

• No Admission of Liability

  Include a no-admission-of-liability clause stating that the payment settles a disputed claim and is not an admission of fault by any party. This is standard and enforceable in Delaware and lets a party resolve a matter without conceding wrongdoing. Pair it with the recital that the Agreement is a compromise of a disputed claim.

• Enforcing a Delaware Settlement

  A settlement agreement is enforced in Delaware like any other contract. If the dispute is already in a lawsuit, present the settlement to the court; if the other side breaks the agreement, you can move to enforce it or sue for breach. Say in the Agreement how a missed payment is handled so enforcement is straightforward.

• Identify the Parties and Recite the Dispute

  Name every party to be bound and released, including agents, employees, and successors where intended, and recite the dispute clearly (the claim, incident, or case number if a lawsuit is pending). A vague description of the dispute or a missing party is a common reason a release later fails to cover what the parties expected.

• Payment Terms and Delaware Governing Law

  Set out the settlement amount, the due date or payment schedule, and how a missed payment is handled, then state that Delaware law governs the Agreement. Consider a tax or wage allocation where the settlement resolves an employment or injury claim, since how a payment is characterized can affect its tax treatment. Confirm allocation with a tax professional before signing.