Settlement agreement or determination agreement? The difference can have major consequences
You may already have heard of a settlement agreement, but not yet of a determination agreement.
What is the difference between these two agreements?
A settlement agreement is a specific type of determination agreement, but a determination agreement is not necessarily a settlement agreement.
To make the distinction clear, both concepts are explained below, together with the conditions that highlight the differences between them.
Determination agreement
A determination agreement is a written agreement in which the parties settle part or all of a dispute. As a partial settlement, it may also record a factual situation. It binds the parties, even if it later appears that reality differs from what was recorded in the agreement.
It has binding evidential value when it meets the evidentiary requirements of Article 1325 of the former Civil Code. This means that a court must accept its contents as true. Evidence to the contrary can only be provided by producing another written document, signed by the parties, that contradicts the determination agreement, or by way of an admission.
In this way, the parties bring an end to an existing or future dispute.
Settlement agreement
A settlement agreement is a reciprocal agreement in which the parties make mutual concessions in order to end a dispute or prevent one from arising in the future, without either party thereby acknowledging that the other party’s claims are well founded (Belgian Supreme Court, 31 October 2005, S.05.0007.F, Pas. 2005, 2084).
It is therefore a specific type of determination agreement by which uncertainty is also established.
The key feature of a settlement agreement is the existence of mutual concessions. In other words, not every party receives everything to which it believes it is entitled. The agreement is reached through give and take, after which the parties definitively resolve their dispute through the agreed arrangement. In principle, that arrangement can no longer be challenged, and no further disputes or defenses can be raised in relation to it.
For more information on a settlement agreement
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