11 Dec What is involved in an offer to settle?
Once an action has commenced, the parties will engage in a negotiation process. During negotiations, a party can send an offer to settle at any point and can exchange many offers before one is finalized.
An offer to settle is an outline of the terms the party proposes to resolve the dispute. Each party will have the opportunity to draft their offers in hopes they will reach a finalized settlement that they believe is reasonable. A settlement offer should always include a time limit for the party to respond and the signature of the representing party.
How do I respond to a settlement offer?
The plaintiff or defendant always have the option to make a counteroffer, accept the offer, or decline the offer. A counteroffer is when the other party doesn’t agree with the content of the settlement offer, so they respond with what they believe is reasonable.
If the party decides to decline the offer, they have rejected the opportunity to settle and will proceed to litigation. This is a risky decision, as the parties will have less control over the contents of the settlement because the judge will decide what compensation is fair.
Lastly, if the offer is accepted, the parties have agreed upon the terms and the lawyers will finalize the settlement. A party can withdraw their offer to settle if it has not already been accepted by the other party.
What can be included in a settlement offer?
There are two types of settlement offers, a monetary or non-monetary settlement. A monetary settlement provides renumeration for the damages the defendant has caused the plaintiff. For example, in a wrongful dismissal case, the employer may owe the plaintiff termination pay. The parties would offer the amount of termination pay they both believe is reasonable, and the accepted settlement offer would include the agreed upon pay the employee must be compensated.
A non-monetary settlement provides resources, other than remuneration, that are valuable to the parties involved. For example, reparations, return of property, letter of recommendations, etc. Depending on how the plaintiff and defendant believe the matter can be resolved fairly, the offer could include monetary and/or non-monetary resolutions.
Settling a matter privately between parties is a much faster and less costly method compared to litigating in court. However, there are cases where the parties cannot agree on a settlement and the matter would then move forward to litigation. The lawyer will discuss whether your case is at a high risk of proceeding to court, or whether it is likely that it will settle promptly.