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Release and Settlement Agreement

The document that ends a claim by giving up the right to bring it - normally final, and normally broader than people expect.

Informational only - this is not legal advice. These definitions explain general legal vocabulary in plain English. They are not advice about your situation, reading them creates no attorney-client relationship, and the law differs from state to state and changes over time. For advice you can rely on, speak to a lawyer licensed in your state.

Looking for a lawyer rather than a definition? Skip to the state-by-state list of law firms for this.

What it means

Most disputes end in a settlement rather than a judgment, and the settlement is executed through a written agreement in which one side pays and the other gives up the claim. The operative half is the release: a promise not to pursue the claim, which is what the payment is actually buying. A signed release is normally final, and it is generally enforceable even if the injury later turns out to be worse than believed, which is the single most important thing to understand before signing one.

The scope of a release is a drafting question with large consequences. A narrow release covers one identified claim arising from one identified event. A general release covers all claims between the parties, known and unknown, up to the date of signing - including claims the signer has not thought about and, in some formulations, ones not yet discovered. Several states have doctrines or statutes addressing unknown claims specifically, and a release intended to reach them is often required to say so explicitly. Related terms commonly travel with it: an indemnity or hold-harmless clause under which the releasing party takes responsibility for third-party claims such as unresolved medical liens, a confidentiality clause, a non-disparagement clause, and a statement that settlement is not an admission of liability.

Certain categories carry mandatory protections that override ordinary contract freedom, and they exist because release language would otherwise defeat the underlying right. Settlements involving a minor or a legally incapacitated person generally require court approval regardless of what the parties agree. Workers' compensation settlements typically require approval by the compensation agency. A release of federal age discrimination claims must satisfy specific statutory requirements to be knowing and voluntary, including a consideration period and a revocation period whose lengths are set by that statute. Some claims cannot be prospectively waived at all, and some clauses restricting a person from reporting to a government agency are unenforceable.

Two practical points close the picture. Payment mechanics matter: whether payment is a lump sum or structured, when it is due, who is named on the check, and how outstanding liens and reimbursement claims are to be satisfied - because a release that resolves the claim while leaving a health plan or Medicare interest outstanding can leave the recipient personally exposed. And the tax treatment of a settlement is not uniform; compensation for physical injury is treated differently from other categories, and allocation language in the agreement can matter.

Where this comes from

Releases are contracts and are governed by state contract law, including state-specific rules on the effect of releasing unknown claims, on mutual mistake, and on when a release may be set aside. Court approval of settlements involving minors and incapacitated persons is required by state statute and court rule. Waivers of claims under the Age Discrimination in Employment Act must meet the requirements of the Older Workers Benefit Protection Act, 29 U.S.C. § 626(f), which sets a minimum consideration period and a revocation period whose durations are stated in that statute and are not reproduced here. Reimbursement and recovery obligations that survive settlement arise under the Medicare Secondary Payer provisions at 42 U.S.C. § 1395y(b), state Medicaid recovery statutes, and plan or policy terms. Federal taxation of settlement proceeds is addressed by 26 U.S.C. § 104. Approval requirements for workers' compensation settlements are set by state statute. Every applicable period for consideration, revocation, approval or payment is set by the governing statute, rule or agreement, and this page states none.

When people hire a lawyer for this

Have a release reviewed before signing rather than after, because after is usually too late - this is one of the few documents in ordinary life that is genuinely difficult to undo. The specific things worth asking about are the breadth of the release (is it this claim, or everything, or everything unknown as well), whether you are agreeing to indemnify the other side for liens you may not know about, whether every medical lien and reimbursement claim has actually been resolved and by whom, and what the tax treatment of the payment will be. Be cautious about signing a release early in an injury claim before the medical position is understood, and treat an insurer's prompt offer accompanied by a broad release as a reason to slow down. If a minor is involved, do not expect an informal agreement to hold: court approval usually is not optional.

Worried about the cost? A lawyer can be hired for one part of a case only (limited-scope representation), may be paid from what a claim recovers (contingency fee), or may be free through a pro bono program or legal aid; a court can also waive its own filing fees.

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Related terms

Other entries in the same area of law, each written from the same primary sources.

AppealThe review of a trial court's decision by a higher court - what can be appealed and when (the final-judgment rule and its exceptions), the notice of appeal and why missing it is fatal, what "standard of review" means and why most appeals are lost on it, preserving error at trial, the record and briefs, and what an appellate court can and cannot do with the result.
Attorney-Client Privilege and Work ProductThe two protections that keep what a client tells a lawyer, and what a lawyer prepares for a case, from being forced into evidence - what the privilege covers and what it does not, who holds it and how it is waived, the crime-fraud exception, the separate and narrower work-product doctrine, and how each is asserted in discovery.
Burden of Proof (Standards of Proof)Who has to prove what, and how convincingly, before a court will rule for them - the difference between the burden of production and the burden of persuasion, the three standards (preponderance of the evidence, clear and convincing evidence, beyond a reasonable doubt) and where each applies, presumptions that shift the burden, and why the burden decides cases where the evidence is in balance.
Complaint and Answer (Pleadings)The documents that start a civil case and frame what it is about - what a complaint must contain, how a defendant answers it, what an admission, denial and affirmative defense each do, counterclaims and cross-claims, and what happens when a pleading is late, deficient or needs to be amended.
Contempt of CourtThe court's power to punish disobedience of its own orders - the mechanism that makes a court order more than a piece of paper.
Court Fee Waiver (In Forma Pauperis)How a person who cannot afford court filing fees asks the court to excuse them - the federal and state procedures, who usually qualifies, and what a waiver does not cover.
Default JudgmentA judgment entered because the person sued did not respond in time - the way most consumer debt lawsuits actually end.
DepositionSworn, recorded, out-of-court questioning of a witness by the opposing lawyer, before any trial.
DiscoveryThe pre-trial process in which each side must hand over relevant evidence to the other.
Expert Witness (Daubert and Frye)A witness allowed to give opinions rather than only facts because of specialized knowledge - who qualifies, the gatekeeping test a judge applies to the reliability of the method (Daubert in federal court and most states, Frye in the rest), the written report and deposition that precede trial, the difference between a retained expert and a treating professional, and why a case can be lost when its expert is excluded.
Fee Agreement and RetainerThe engagement letter that sets what a lawyer will do and how they are paid - hourly, flat or contingent fees, retainers held in trust, costs, and what to do about a fee dispute.
Injunction and Temporary Restraining OrderThe court orders that require a party to do or stop doing something rather than pay money - the three stages (temporary restraining order, preliminary injunction, permanent injunction), the four-factor test for emergency relief, the bond the applicant must post, how an order is enforced through contempt, and why a violated order is obeyed first and challenged second.
Jurisdiction and VenueThe three questions every lawsuit has to answer before its merits can be heard - whether the court has power over this kind of case (subject-matter jurisdiction), power over this defendant (personal jurisdiction), and whether this is the right place within the system to bring it (venue) - what each requires, how each is challenged, and why a judgment entered without jurisdiction is void.
Limited-Scope Representation (Unbundled Legal Services)Hiring a lawyer for one defined part of a legal matter - advice, drafting a document, or a single hearing - instead of the whole case, and the written agreement that sets the boundary.
Mediation and ArbitrationTwo ways of resolving a dispute outside a trial that are constantly confused - one produces an agreement you can walk away from, the other a decision you generally cannot appeal.
Motion to DismissA request to end a case at the outset on the basis that, even if everything alleged is true, it does not amount to a legal claim.
Pro Bono Legal HelpFree legal work by volunteer lawyers - what the professional rules ask of lawyers, how people of limited means are matched with a volunteer, and why it is not the same as legal aid.
Representing Yourself (Pro Se)The right to conduct your own case without a lawyer - available in almost every civil court, and held to almost the same standards as a lawyer.
Res Judicata and Collateral Estoppel (Preclusion)The rules that stop a dispute from being litigated twice - claim preclusion, which bars a second suit on a claim that was or could have been decided, and issue preclusion, which bars re-arguing a specific issue actually decided, the elements of each, who is bound, the exceptions, and why "could have been raised" is the part that surprises people.
Service of ProcessThe formal delivery of court papers that gives a court power over the person sued - and the step whose failure undoes more judgments than any other.
Small Claims CourtA simplified court for lower-value disputes, designed to be used without a lawyer - and in some states lawyers are not allowed in it at all.
Statute of LimitationsA deadline, set by statute, after which a legal claim can no longer be brought at all.
SubpoenaA court-backed order to give evidence or hand over documents - enforceable against people who are not parties to the case at all.
Summary JudgmentA ruling that decides a case, or part of one, without a trial because the essential facts are not genuinely in dispute.

« All glossary terms

Part of the LawyerLand plain-English legal glossary. Definitions are written from primary sources - statutes and court rules - and each entry states the authority it rests on, or says plainly when the doctrine is state law with no national rule.

If you cannot afford a lawyer, civil legal aid programs provide free help with many of these problems: civil legal aid programs by state.

Related free reference tools: statute of limitations for a personal-injury claim, by state, quoted from each state's official text - part of LawyerLand's legal reference tools.