Civil Litigation,
Law Practice
Aug. 16, 2019
Properly drafting settlement agreements with payments
A recent appellate ruling is yet another stark reminder of the severe consequences when a settlement requiring payments over time is done improperly. The holding confirms existing law that a settlement agreement may not include an impermissible penalty by requiring a defendant to pay more than the agreed upon sum in event of default.
Steven H. Kruis
ADR Services, Inc.Email: skruis@adrservices.org
Steven has been a full-time mediator since 2002, and mediated well over 2,000 matters throughout Southern California. He is with the San Diego Office of ADR Services.
Many mediated settlement agreements provide for payments over time, especially where the party making payments has limited cash flow. A common practice is for the parties to agree upon an acceptable amount, negotiate an installment payment schedule, and provide for entry of judgment for a larger amount in the event of default. Judgment is entered on an expedited, ex parte basis after notice and opportunity to cure. The notion is to motivate the obligated party to make...
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