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Settling Out of Court: The Mutual Release

A legal dispute can quickly become more expensive than either party anticipated, particularly when you consider lost productivity and work time. At some point, settling out of court may become a viable option for both parties, allowing them to move on.

An Overview of the Mutual Release

A mutual release permits both parties to stop pursuing their claims against each other, including both future and current claims. Depending on the agreement you draft and what conditions it includes, parties may reserve the right to file claims for issues that haven’t yet arisen related to the current dispute. However, in most situations, both parties waive their rights to any claims stemming from the initial dispute. This prevents one party from accepting a settlement amount and then immediately suing the other party again for the same reason.

Just like any other legal contract, a mutual release must be thoroughly analyzed by an attorney before you sign it. Both parties involved in a claim give up certain rights, so you should know exactly what you are losing and gaining before you sign a mutual release.

When to Use a Mutual Release

Mutual releases are a valuable tool in many areas of law, allowing individuals to void contracts and minimize the potential financial damage of a case that goes to court. Some areas of law that utilize mutual release agreements include personal injury, debt collection, and business law.

In business law, a mutual release often helps one partner terminate a business contract without being held to the termination penalties in the contract. This is an option to consider if, for example, a business partner fails to perform the work they agreed to do, misuses company funds, or acts against the best interests of the company. While one or both parties may have valid claims against each other, a mutual release protects both from a drawn-out court battle and lets them terminate the contract.

Is a Mutual Release Agreement the Right Choice for You?

If you’re currently involved in a legal dispute, you may be considering a settlement. Note that your settlement amount may be less than you would be awarded if the case went to court. However, it’s also possible that the court would dismiss the case and leave you with nothing, so both options have risks. Additionally, you must consider whether or not the additional time and stress of a court case is worth the potential financial benefit.

It all comes down to the specifics of your case and what you stand to gain. For more personalized advice, reach out to Trembly Law and schedule a time to talk about your legal needs.


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