Courts favor settlement agreements because they bring litigation to a close and allow the parties and the Court to go onto other matters.
Professionally prepared settlement agreements will normally include a covenant all disputes – whether known or unknown – are being settled, and that the parties agree to waive the protections of Civil Code Section 1542. (In the absence of such a waiver, Section 1542 would preserve claims the party does not know or suspect exist at the time of the settlement.)
By including the waiver in the settlement agreement, the parties are agreeing to settle any and all disputes between them concerning the subject of the settlement, so that if either of them learn of some fact existing at the time of their settlement, not then known, that party cannot unwind the settlement agreement or sue based on that fact.
Professionally prepared agreements also often include a covenant that the settlement is deemed to be “judicially supervised.” That clause gives the court the right to enter judgment based on the settlement agreement. At times, however, the settlement agreement itself is unclear or fails to bring the bargained peace.
Like any other contract, a settlement agreement may be breached. In such cases, the dispute over the settlement agreement may need to be litigated.
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