Build a settlement term sheet the parties can perform
For lawyers and parties preparing for settlement discussions.
How do I turn an agreement in principle into terms that people can actually carry out?
List each proposed exchange with the responsible party, required act, timing trigger and proof of completion. Identify who can approve it and which issues are still open. Have counsel address the intended effect of the writing before anyone signs or reports a settlement.
Start with the exchange
Identify each party by its correct name and capacity. If payment is proposed, specify who pays whom, the amount and installments, the trigger for each payment, and how timely payment will be confirmed. If someone must repair, return or deliver something, describe the item, location, condition, acceptance method and timing.
Put releases in their own paragraph. Who releases whom, which disputes or claims are covered, through what date, and what obligations continue? Check whether the treatment of costs, fees or third-party interests needs its own decision. Mark pending points and say whose approval is needed.
Walk through the sequence
Read the terms as if tomorrow were the first day of performance. Can the payer identify when its clock starts? Can counsel tell when to request dismissal? If dismissal depends on receipt of funds, decide what evidence confirms receipt. Decide what happens after partial, disputed or late performance. Handle confidential payment details through an independently verified channel.
Record the order of signatures, approvals, performance and court steps. Separate a proposed court action from what the parties themselves can promise. If an order or approval is needed, name the person who will seek it and what happens if the request is denied.
Resolve what signing means
Ask counsel to put the parties’ intention about present obligations and any later agreement into the text. Governing law, the language and the setting can affect the result. The Southern District of New York’s mediation procedures encourage documenting material terms once agreed. Check the procedures that govern the actual dispute before using a court’s example.
Worked example
Illustrative example. The first draft calls for $12,000 “after repairs.” One party means after the contractor signs off, the other after the owner inspects. The term sheet can identify the inspection, the person who verifies completion and a process for disputed defects. Leave the trigger open until both sides agree to it.
Primary sources
Related work at Agentic Attorney
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