When two sides in a dispute make an agreement to settle a matter before it is due to go before a judge, it is called “out of court.” The notion of settling a dispute in such a manner has led to the term “out of court settlement” in which one party accepts an offer from another. Out of court settlements are most common in litigation. In such a case, a person or company will sue another individual or entity for damages or other compensation. Grievances that lead to these types of lawsuits include injury, slander, libel, unfair dismissal, and medical malpractice.
In these cases, an individual or company will consult with a lawyer about his or her case. The lawyer will decide if the individual has a chance of success and, if so, will then develop a legal strategy. Some lawsuits are filed with the intention of drawing a settlement offer from an opponent, while others seek different types of restitution.
Once a lawsuit has been filed, the defendant must seek legal advice. The reaction to the suit may depend on a combination of factors including the veracity of the claim and the amount of money available for legal defense or settlement. Many individuals and companies actively seek to avoid an expensive and open court case by making a monetary offer to the claimant out of court.
An out of court settlement begins when the defendant tries to offer money or other actions to the claimant. Lawyers representing both sides will negotiate a common understanding, whereby the right to sue the defendant is exchanged for the money offered. It is common in out of court settlements for a defendant to insist the claimant does not reveal any information regarding their case as part of the settlement.
As legal proceedings have already been set in motion by the claimant’s team, the next step is for both parties to halt proceedings. In the U.S., the settlement is submitted to the court in order to be rolled into a court order. If one party does not keep to the settlement, if the claimant speaks out, or if the defendant fails to pay the agreed-upon amount, they will be found in contempt of court. In some types of U.S. court cases, information can be kept confidential.