What is a Deed of Settlement

Articles > Contracts

What is a Deed of Settlement?

December 2, 2020         Daniel Katz

A deed of settlement is a legal document which formalises an agreement between conflicting parties in a dispute. This lays out the responsibilities and tasks that each party must take in order to settle the issue in dispute.

This article will explore the nature of a deed of settlement, and when it is most appropriate to be used.

When to Use a Deed of Settlement

Like all forms of dispute resolutions, a deed of settlement is only appropriate in particular circumstances. In saying this, here a few circumstances where a deed of settlement may be best for you:

When Litigation is Possible or Already Ongoing

Litigation does have its benefits. For example, litigation provides a final judgement which solves any ambiguity surrounding the relevant dispute. However, small businesses may not be able to afford such processes. As such, a deed of settlement may assist you in saving both time and money. 

If the litigious approach has already been taken, a deed of settlement can still be utilised. Here, it is essential that the deed includes a clause (such as a notice of discontinuance), in order to bring an end to the court proceedings.

The Reputation of your Business is on the Line

It is no secret that word of a litigation process can spread like wildfire through the business world, as well as attract unwanted media attention. This may prove to be detrimental to the reputation of your business, and could negatively impact future relationships. In saying this, by virtue of confidentiality clauses, a deed of settlement is highly beneficial in protecting the business’s reputation. This is because internal workplace disputes are highly unlikely to be publicised.

What to Include in a Deed of Settlement

The deed must contain particular essential terms. Here are some essential terms that must be included in a settlement:

  • The date that the deed is made, and the parties involved in the dispute.
  • Recitals are needed to briefly discuss the background of the issue and the case.
  • Terms of settlement laying out the jurisdiction that will govern any breaches of the agreement, the amounts that must be paid and any relevant confidentiality clauses.
  • A statement of service dictates the details of the applicant’s employment by virtue of the deed (length of service, position, responsibilities and duties). 
  • A release clause removes either party’s right to sue each other in the future, regarding the dispute at hand. 
  • A notice of discontinuance provides a time period for which the applicant can file to withdraw from the case.
  • All legal costs associated with the deed.
  • Avoid unfair dismissal claims

To Sum Up

A deed has several benefits, as explained above. To summarise, here are the key reasons for using a deed of settlement:

  • Highly confidential.
  • There are no court fees involved in a settlement as this is not a litigation process. This, in turn, allows parties to avoid the excessive costs, and the time involved, in resolving disputes in court.
  • Avoiding litigation can protect the reputation and goodwill of your business.
  • A deed of settlement is flexible in securing the interests and needs of each party.

Deeds of settlement can be complex. In particular, deciding different kinds of deeds (including those from other alternative dispute resolution processes) is not always a straight forward process. However, we are here to help! If you need any assistance in determining whether a deed of settlement is right or any dispute generally, our commercial lawyers are here to help. Just call us at 1300 337 997, or complete the form on this page.

About Daniel Katz

Daniel is a legal intern at OpenLegal, placed in our legal content team. He is currently studying a Bachelor of Laws at the University of Technology Sydney. Daniel's interest lies in economics and media/startup law.