In the course of running a business, there may be some situations where you might run into a dispute with another business (though, let’s hope this doesn’t happen!).
In these situations, there can be a lot of back and forth between both of you. And, if you’ve finally come to “settle” on an agreement to end the dispute, you want to avoid any further headaches.
This is where a Deed of Settlement steps in.
What Is A Deed of Settlement?
A Deed of Settlement is effectively a legal document that is signed by both parties to settle a dispute.
Generally, both parties sign a Deed of Settlement to avoid any further legal costs or disputes.
The terms within this document are legally binding to reflect whatever both parties agreed.
For example, you might have entered into a lengthy dispute with another business around debt recovery.
To settle the dispute and avoid any more headaches, you might both agree to settle for a certain amount of money. And, you want to make sure this issue doesn’t come up again.
So, whatever you’ve agreed to “settle” on should be put down in writing.
In your Deed of Settlement, you can include any remaining payment obligations or confidentiality requirements to make sure that both parties don’t ruin each other’s reputation by spreading word about the dispute.
This keeps the end of the process clean, and ensures that any remaining obligations will be completed by signing a legally binding agreement.
It’s always a good idea to formalise any agreement you make. And it’s even more important to do this if you want to avoid any further disputes.
What Is Included In A Deed of Settlement?
This would really depend on the situation.
But, typically, a Deed of Settlement will include two main types of clauses:
- Release clauses: Parties agree to release each other from any future claims, demands and actions against each other.
- Default clauses: Setting out consequences if one party doesn’t fulfil their obligations under the deed.
Does A Deed Of Release Need To Be Witnessed?
Whether or not your deed requires a witness depends on the state or territory you are in. It also depends on whether you are signing as an individual or on behalf of a company.
This is because a Company Constitution may set out certain rules for how to execute a deed, and a Constitution’s rules are generally different for each company.
However, to be on the safe side, it’s good business practice to have a witness regardless of the circumstances.
Can I Refuse To Sign A Deed Of Settlement?
The general answer here is yes. Like a standard contract, you don’t need to sign something that you don’t agree with.
You can negotiate the terms of the deed or chat to a lawyer who can advise you on how the terms of the deed will affect you in your specific situation. This way, you can ensure you’re in a fair position before you sign anything.
If you need help ending a dispute by putting together a Deed of Settlement, or need a legal professional to review your documents, we’re here to help!
You can reach out to us on 1800 730 617 or firstname.lastname@example.org for a free, no-obligations chat.
We'll get back to you within 1 business day.