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Dear Students,
I hope you are all doing well.
Please read this message carefully, as it contains information that will allow you to prepare for our second discussion forum, during which you will (i) draft a settlement agreement based on a fact pattern, and (ii) provide comments to a draft written by another student.
First, here are some instructions on the logistics of the forum:
– I have created a new thread on our discussion forum on Blackboard for each of the five work groups in the program. The work group members are the same as last time, and they are listed on Blackboard under the heading “Groups.” Please make sure that you remember which work group you are in, as well as who the other members of the work group are. Also, please pay attention to the order in which the members are listed, since your position on the list will determine the fact pattern that you will work with for the settlement agreement exercise, as well as the student whose draft you will be commenting on.
– All five groups will be working on the same exercises during the discussion forum, but you will only be able to access your group’s forum.
– The discussion forum will take place from December 2 at 9:00 am EST to December 5 at 9:00 am EST. I will make your group’s new thread visible to you in advance to accommodate the different time zones and leave them open until our class meets on December 7.
– There will only be a single thread for each group for all four days.
– I am attaching to this message a document containing seven different fact patterns. Each fact pattern describes a dispute between two or more parties which have now agreed to settle. Each of you will draft a settlement agreement for the fact pattern that corresponds to your position in the working group, i.e., if you are listed first on your working group, you will draft an agreement that settles the dispute described in the first fact pattern; if you are listed second, you will draft an agreement that settles the dispute in the second fact pattern, and so on.
– I am providing the fact patterns in advance so that you can all have your settlement agreements ready and posted on your group’s thread by the end of the first day of our discussion forum. Instructions for drafting the settlement agreement are provided below.
– In addition to drafting and posting your own settlement agreement on the first day of the forum, on days two through four you will provide comments for the agreement drafted by the student listed after you on the working group list, i.e., if you are listed first you will comment on the agreement drafted by the student listed second, if you are listed second you will comment on the agreement drafted by the student listed third, if you are listed last you will comment on the agreement drafted by the student listed first, etc. If the draft that you are supposed to comment on is not posted by the drafting student by the beginning of the second day of the discussion forum, please choose any other draft agreement that has been posted on time.
Second, below are some instructions and recommendations on how to draft your settlement agreement and how to comment on other students’ drafts.
– A settlement agreement is a contract entered into by the parties involved in a legal dispute, usually reached through a negotiation or a mediation. The agreement outlines the terms and conditions agreed upon by the parties to resolve the underlying issues without proceeding to trial. Settlement agreements are generally enforced by courts, treating them as legally binding contracts.
– The fact patterns in the attached documents provide the basic terms of the dispute. To complete the exercise, please decide how the parties will resolve the dispute. You should not change the facts, but you can add any facts that you think are necessary. For purposes of this exercise, the settlement agreement can reflect any potential outcome of the facts in dispute- it does not have to be the most “reasonable” or “fair” outcome. The agreement does, however, need to reflect all the details necessary to settle all of the issues in dispute (not only the monetary ones) in a way that is concise and avoids future disputes relating to interpretation, time and manner of performance, or any other relevant matters.
– Please draft the settlement agreement from scratch. You can consult model settlement agreements if you wish to do so, but the clauses reflecting the agreement of the parties as to the matters in dispute should be drafted by you.
– For purposes of this exercise, you do not need to include any “building block” provisions in your draft. Instead, focus on drafting provisions that reflect how the different claims are being resolved.
– You should spend no more than one hour completing the drafting exercise, including reading the facts, deciding what the outcome of the settlement is, and drafting the agreement. The agreement should not be longer than a single page.
– Ensure that all the relevant facts are included: Who, What, When, Where, How.
– When commenting on other student’s agreements, you do not need to critique the terms of the resolution (for example, it is irrelevant for purposes of this exercise whether you think a specific settlement amount is unrealistic or unreasonable). Instead, you should focus on identifying any issues that may arise in interpreting the agreement (for example, if it is unclear when the settlement amount is due, or who has to pay it, or whether any claims are left unresolved). You can provide drafting comments, suggest matters that you think are left unresolved, or provide general comments.
Thank you for carefully reading these instructions, and please do not hesitate to let me know if you have any questions.
Best,
CPL
Settlement Agreement Fact Patterns
1. Sandwiches and Burritos
Sandwiches LLC opens a store in a strip mall located on Grand Street. In the lease, the mall owner, Big Bad Corp, agrees to a noncompete provision stating that no other sandwich stores will be allowed in the same strip mall. Six months later, a burrito store opens two stores down from the sandwich store, and Sandwiches LLC quickly starts losing business. Sandwiches LLC sues Big Bad Corp for breach of the noncompete clause, demanding closure of the burrito store, clarification of the noncompete clause as it relates to handheld foods, and payment of lost profits in the amount of $50,000.
Steps to Draft the Settlement Agreement:
Title of the Agreement:
Begin with a clear title, such as “Settlement Agreement and Mutual Release.”
Identification of Parties:
Clearly state the full legal names of the parties involved.
Include their business addresses.
Recitals (“Whereas” Clauses):
Background: Briefly describe the original lease agreement and the noncompete clause.
Dispute: Outline the opening of the burrito store and the resulting dispute.
Purpose: State that the parties desire to settle the dispute amicably.
Definitions (if necessary):
Define key terms like “Noncompete Clause,” “Burrito Store,” or “Handheld Foods” to avoid ambiguity.
Settlement Terms:
Clarification of Noncompete Clause:
Clearly specify how the clause will be interpreted moving forward (e.g., whether burrito stores are considered competitors).
Actions by Big Bad Corp:
Detail any actions Big Bad Corp agrees to take (e.g., modifying the lease terms, ensuring no future competing businesses open).
Financial Compensation:
State the amount Big Bad Corp will pay to Sandwiches LLC ($50,000 or another agreed amount).
Include payment terms (lump sum, installments, due dates).
Closure or Relocation of Burrito Store (if applicable):
Specify if the burrito store will be closed, relocated, or allowed to remain under certain conditions.
Mutual Release of Claims:
Release by Sandwiches LLC:
Agree to release Big Bad Corp from all claims related to the dispute.
Release by Big Bad Corp (if mutual):
Big Bad Corp releases Sandwiches LLC from any potential counterclaims.
Confidentiality Clause (optional):
If the parties wish, include terms that keep the settlement details confidential.
Non-Admission of Liability:
State that entering into the agreement is not an admission of wrongdoing by either party.
No Future Claims:
Agree that neither party will bring future claims related to this dispute.
Governing Law and Jurisdiction:
Specify which state’s laws govern the agreement.
Determine the venue for any potential legal actions.
Entire Agreement Clause:
State that the agreement represents the complete understanding between the parties.
Severability Clause (optional):
Include that if any part of the agreement is found invalid, the rest remains effective.
Amendments:
Note that any changes to the agreement must be in writing and signed by both parties.
Execution:
Provide spaces for authorized representatives to sign and date the agreement.
Consider including notarization if required.
Additional Tips:
Clarity: Use clear and unambiguous language.
Specificity: Be specific about dates, amounts, and obligations.
Consistency: Ensure terms are used consistently throughout the document.
Legal Compliance: Make sure the agreement complies with relevant laws.
Example Structure (Note: This is a general outline and not the actual content):
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement (“Agreement”) is made and entered into on [Date], by and between Sandwiches LLC (“Sandwiches”) and Big Bad Corp (“BBC”).
WHEREAS, […]
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein, the parties agree as follows:
Clarification of Noncompete Clause: […]
Actions to be Taken by BBC: […]
Payment Terms: […]
Mutual Release of Claims: […]
Confidentiality: […]
Non-Admission: […]
Governing Law: […]
Entire Agreement: […]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
Sandwiches LLC
By: _________________________
Name: _______________________
Title: ________________________
Date: ________________________
Big Bad Corp
By: _________________________
Name: _______________________
Title: ________________________
Date: ________________________
Final Reminders:
Review: Always review the agreement for any omissions or errors.
Legal Advice: Consider that in practice, agreements should be reviewed by legal counsel.
I hope this guidance helps you in drafting your settlement agreement. If you have any specific questions about any section or need further clarification on any point, feel free to ask!
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
Thought about settlement agreement drafting for 5 seconds
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the “Agreement”) is entered into as of _____________, 20, by and between Sandwiches LLC, a [state] limited liability company having its principal place of business at [address] (“Sandwiches”), and Big Bad Corp, a [state] corporation having its principal place of business at [address] (“BBC”). Sandwiches and BBC are referred to collectively as the “Parties.”
WHEREAS, Sandwiches entered into a lease with BBC for commercial space located at [address], containing a noncompete clause prohibiting BBC from leasing adjacent space to any other “sandwich” stores;
WHEREAS, BBC subsequently leased space in the same strip mall to a burrito store located two storefronts away, and Sandwiches alleged that the burrito store’s operation violated the noncompete provision and caused it lost profits;
WHEREAS, Sandwiches filed suit against BBC demanding closure of the burrito store, clarification of the noncompete clause’s scope as it relates to handheld foods, and payment of lost profits in the amount of $50,000; and
WHEREAS, the Parties desire to fully and finally settle all disputes and claims relating to the foregoing.
NOW, THEREFORE, in consideration of the mutual promises and obligations herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Payment and Performance by BBC. Within thirty (30) calendar days of the Effective Date of this Agreement, BBC shall pay Sandwiches the sum of Fifty Thousand Dollars ($50,000.00) in a single lump-sum payment by certified check or electronic funds transfer to an account designated in writing by Sandwiches. Following this payment, Sandwiches agrees that BBC shall have satisfied all monetary obligations relating to the claims asserted by Sandwiches.
Clarification of the Noncompete Clause. The Parties agree that the noncompete clause in the original lease shall not apply to the burrito store or similar establishments serving primarily “burritos” or “tacos.” The Parties further agree that the term “sandwiches,” as used in the lease, does not include burritos, tacos, wraps, or other handheld foods that differ in principal type and customary preparation from traditional sandwiches (e.g., sliced bread sandwiches, subs, paninis).
Closure of the Burrito Store. Sandwiches agrees that it will no longer seek closure of the burrito store currently operating within the strip mall. BBC shall not be obligated to remove the burrito store or prevent its continued operation.
Mutual Release of Claims. Upon receipt of the payment in Paragraph 1, Sandwiches irrevocably and unconditionally releases and discharges BBC and its owners, affiliates, successors, and assigns from any and all claims, demands, causes of action, damages, or liabilities, known or unknown, arising out of or related to the noncompete clause and the leasing of space to the burrito store. BBC likewise releases Sandwiches from any claims or counterclaims arising from the same dispute. Each Party represents that it has not assigned or transferred any such claim to any other person or entity.
No Admission of Liability. This Agreement is the result of a compromise and shall not be construed as an admission of wrongdoing or liability by any Party.
Entire Agreement. This Agreement sets forth the entire understanding of the Parties and supersedes all prior oral or written agreements related to the subject matter herein. This Agreement may not be amended except by a writing signed by both Parties.
Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of [State], without regard to its conflict of laws principles. Any dispute arising from this Agreement shall be brought exclusively in the state or federal courts located in [County], [State].
Counterparts and Signatures. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same agreement. Electronic or facsimile signatures shall be treated as originals for all purposes.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
SANDWICHES LLC
By: ___________________________
Name: _________________________
Title: __________________________
Date: __________________________
BIG BAD CORP
By: ___________________________
Name: _________________________
Title: __________________________
Date: __________________________
Course Materials
Dear Students,
I hope you are all doing well.
I have uploaded the power point presentation to a shared folder in the Blackboard page for the course.
Also, for those who asked, below are the two contract drafting books I recommended during class:
Charles M. Fox. Working with Contracts. ISBN 9781402410604 (Printed)
Tina L. Stark. Drafting Contracts. ISBN 978073559477 (Digital)
Please let me know if you have any questions.
Best,
CPL
Drafting from scratch: settlement agreement
Students will be provided with a fact pattern involving a number of isues in dispute. Students will be paired (or grouped in teams depending on number of students) and will have to negotiate each of the issues and provide an explanation of the resolution of each of them as well as proposed language for the settlement agreement.
The fact pattern willl be provided before class.
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