5 Things To Expect If You Don’t Sign A Settlement Agreement

Settlement agreements are well known to be helpful in resolving disputes between conflicting parties. While it is not compulsory to sign a settlement agreement, you may experience some significant consequences if you don’t sign this document.

This article will shed more light on some of these consequences.

What is included in a settlement agreement?

A settlement agreement may include an admission of guilt by the defendant, an arrangement for payments or damages, and a statement of terms. For example, a settlement agreement might state that an employer will pay $10,000 to an employee, a victim will not speak publicly about an issue, and that both parties in an agreement will keep confidential any information exchanged during negotiations.

What Happens If You Don’t Sign A Settlement Agreement?

Legal actions can be taken

If you do not sign a settlement agreement, the other party may seek legal remedies. The rationale behind this is that the court would always advise each party to at least try to resolve their dispute through negotiations before taking any legal actions. 

For instance, if employers fail to sign an employment settlement agreement over wrongful dismissal claims, employees are well within their rights to lodge an employment tribunal claim within three months of wrongful dismissal. In this case, the tribunal may order either party to take some kind of action. This could mean that one side must give the other party something (like financial compensation), or that the other side has to do something (like tender an apology).

It Could Place a level of strain or damage on Your Relationship With the Other Party

If you do not sign a settlement agreement, it may damage your relationship with the other party. This may show that you are unwilling to compromise and resolve the dispute peacefully. Consequently, whatever dispute ought to be resolved may become blown out of proportion. For instance, where a spouse refuses to sign a divorce settlement agreement, the other spouse becomes resentful and more determined to tarnish the spouse’s reputation in an “ugly-sided” divorce proceeding.

It is important to remember that agreements reached through negotiations are often more equitable than those drafted through court orders. 

You may not receive any financial compensation provided under the Settlement Agreement. 

Financial compensation is frequently used as a bargaining tool during settlement negotiations. For example, an employer may offer to pay an employee $50,000 as compensation for dismissal or in exchange for an agreement not to sue. If this settlement agreement is yet to be signed by the employee, the employer may take steps to withhold the payment of the $50,000 with the hope that the employee will later sign the agreement. 

Similarly, in a divorce settlement agreement, a spouse may be offered financial compensation in the form of a lump-sum payment or monthly payments. If the agreement is not signed, this monetary compensation may not be given to the spouse.

Note: Using compensation as a bargaining tool is part of the negotiation process and does not amount to coercion or duress.

The other party may be granted a One Side Decision.

It is quite uncommon for a Judge to grant a one-sided decision. This is because court decisions always favor a balanced approach among all parties involved in an issue.  However, a one-sided decision may be made in certain cases. For example, where a spouse fails to sign a divorce settlement agreement and also fails to honor a subsequent divorce notice upon filling, the judge may reach a decision based on the testimony of the present spouse. Decisions reached here, are nonetheless binding on the “absent” spouse. 

You May Lose Out In The Event of Bankruptcy

Creating a Marital settlement agreement (MSA) can be helpful in protecting marital assets in the event of a subsequent bankruptcy. If a spouse files for bankruptcy when the other spouse hasn’t signed a marital settlement agreement (MSA), the Bankruptcy Trustee may sell martial assets to satisfy creditors. In this case, the other party is likely to lose out on many financial benefits that could have been protected under a (MSA).

Note: where a spouse declares bankruptcy, there are some things that are protected (i.e, child support) irrespective of whether or not the other spouse signs a MSA.

Is It Compulsory To Sign a Settlement Agreement

Signing a settlement agreement is strictly voluntary with no compulsory obligation on any of the parties. Parties to a settlement agreement are only expected to sign the agreement if they are satisfied with the settlement terms. If they feel the terms are unacceptable, their refusal to sign the agreement would be well in order.

Note: In cases where a party had signed a settlement agreement under duress, coercion, or threat, it is possible to set aside or void the agreement. However, until the agreement is set aside, it will remain binding on both parties.

Can You negotiate a better offer?

Where settlement terms are unfavorable, you can always negotiate a better offer. Until a settlement agreement is signed, you are always free to negotiate any terms you deem appropriate.

Can a lawyer sign a settlement agreement for a client?

Yes, a lawyer can sign a settlement agreement on behalf of their client. For this signature to be valid, the client must have given their written consent, which is a standard requirement in any settlement agreement. The agreement becomes invalid and impermissible if the client doesn’t consent to the settlement.

Note: Every lawyer has a duty to disclose any potential conflicts of interest they may have. If you are unsure whether a lawyer has a conflict, it is best to consult with them before granting their consent to sign on your behalf.

Conclusion

If you consider entering into a Settlement Agreement, it is essential to understand what happens if you do not sign it. If you choose not to sign, your options may be limited, and you may miss out on financial compensation. However, this isn’t your cue to sign at the first offer.  You have the right to negotiate any terms you deem appropriate.,

Ultimately, it is important to weigh all of your options before deciding whether or not to sign a settlement agreement. If you have any questions or concerns about this process, please don’t hesitate to speak with an experienced lawyer.

 

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