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Prepared By: Michael Carabash

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One-Sided Settlement and Release Agreements

DISCLAIMER: Please note that the information provided in this DL Guide is NOT legal advice and is provided for educational purposes only. Laws are subject to change and without notice. This DL Guide may be outdated. If you need legal advice with respect to preparing, negotiating, and drafting settlement and release agreements in Ontario, Canada, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. You can contact Michael Carabash directly at michael@carabashlaw.com.

Last Updated: April 2010 © 2008-2010, Dynamic Lawyers Ltd. All Rights Reserved.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

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One-Sided Settlement and Release Agreements

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Table of Contents
What is a One-Sided Settlement and Release Agreement? ............................................................................ 3 When are they used? ....................................................................................................................................... 3 What are the different types? .......................................................................................................................... 3 How is a Settlement and Release Agreement structured? .............................................................................. 4 Consideration .................................................................................................................................................. 4 Defining the “Released Claims” ..................................................................................................................... 5 Payment .......................................................................................................................................................... 5 Release of Claims ........................................................................................................................................... 6 No Claims, Assignment, Assistance, Admission ........................................................................................... 6 Confidentiality ................................................................................................................................................ 7 Is a Witness Required? ................................................................................................................................... 7 General Terms ................................................................................................................................................ 8 About Us ......................................................................................................................................................... 9

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One-Sided Settlement and Release Agreements

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What is a One-Sided Settlement and Release Agreement?
A One-Sided Settlement and Release Agreement is a contract with specific terms related to the idea that one party (the “Releasor”) will settle a dispute with and release another party (the “Releasee”) from liability. More specifically, in exchange for a sum of money or some other form of value, the Releasor will agree not to start or maintain any claims against the Releasee for damages, costs, liabilities, expenses, injuries, etc. associated with the injuries it has or may suffer. In what follows, I’ll discuss some general issues that you should be familiar with when drafting and negotiating these types of agreements.

When are they used?
One-Sided Settlement and Release Agreements can be used in various contexts, such as: The employer wants to provide a termination package An individual is involved in a car accident and is at fault A contractor is being sued for negligence A computer manufacturer is recalling and replacing faulty computers An outdoor company is taking clients white water rafting Basically, whenever a party wants to avoid the hassle of going to court because they may have caused injuries and damages to another party, they would prefer to settle the dispute. To do so formally and to protect themselves, they want something on paper to evidence the fact that the injured party won’t go after them at some future time.

What are the different types?
Worth mentioning is that there are basically two kinds of Settlement and Release Agreements: One-Sided and Mutual. The One-Sided Agreement involves only one of the parties releasing the other party. This type of agreement is used when it is clear that one party was injured as a result of the other party’s act or failure to act. The Mutual agreement, meanwhile, involves both parties settling and releasing each other.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

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Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

One-Sided Settlement and Release Agreements
Defining the “Released Claims”

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In the background section of the Settlement and Release Agreement, you can describe the claims that are going to be settled and released. This description becomes a defined term – the “Released Claims” – for ease of reference throughout the rest of the agreement. While the Releasor will want to have a narrow interpretation of the Released Claims (to help cast a wide net of liability on the Releasee), the Releasee will want a very broad interpretation of the Released Claims (to help reduce the likelihood that the Releasor will go after it for future claims). Take the following example for an automobile accident: “On or about January 1, 2010, an auto accident involving the parties occurred at approximately 10:30 p.m. on Victoria Park Avenue just north of Sheppard Avenue East which resulted or may result in personal injuries to the Releasor (the “Released Claims”)”. You will notice that, while the accident is described with great detail, only the personal injuries of the Releasor are mentioned as being within the definition of Released Claims. But what about property damage to the Releasor’s car? Since that’s not mentioned or included in the definition of “Released Claims”, one could argue that those claims are not released by the Releasor. Ouch! Now you know why it’s best to take your time (and perhaps consult with a lawyer) on how to properly define the Released Claims. This will save you a lot of time, money, and heartache. Remember: language is everything!

Payment
The first part of the body of the Settlement and Release Agreement typically says something to the effect that the Releasor agrees to settle and release the Releasee in respect of the Released Claims in exchange for money. Now, here’s where you can get a bit more detailed: 1. When is the money to be paid (e.g. immediately after signing the agreement, within a set period of time, promptly but in any event within a few days, etc.)? 2. How is the money to be presented (e.g. cash, certified cheque, money order, personal cheque, readily available funds, etc.?) and paid (e.g. lump sum, over time, is there a deposit?) 3. Are there any taxes involved that need to be included in the settlement amount (e.g. GST, PST, etc.)?

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

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Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

One-Sided Settlement and Release Agreements
General Terms

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The end of the Settlement and Release Agreement should include general terms such as: Assignment: can this be done at all, by one of the parties, by both parties consenting in writing? Amendment: can this be done at all, for example, by both parties consenting in writing? Entire Agreement: i.e. this agreement supersedes all other agreements – whether oral or written – relating to the same subject matters in the agreement Governing Law: which jurisdiction governs the interpretation and enforcement of the agreement? Independent Legal Advice: have the parties received it and are they agreeing voluntarily? Interpretation: singular vs. plural; masculine vs. feminine, section headings, etc. Severability: in case one provision is struck down and rendered invalid doesn’t mean the rest of the agreement is Survival of Terms: which terms, if any, survive the expiration or termination of the agreement? Waiver: e.g. no failure or delay of a party to enforce or exercise its rights under the agreement constitutes a waiver

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

The full DL Guide is available for FREE with the purchase of a Legal Form.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com