Settlement Definition

What is a settlement?

A settlement is a voluntary resolution between the parties (a defendant and a plaintiff) in a lawsuit.

Rather than have a lawsuit decided by a judge, some parties will work out a resolution on their own. Settlements can happened anytime during or before a lawsuit actually goes to trial. Typically, the defendant agrees they've harmed the plaintiff and pays some or all of the damages.

For small business owners, settlements are often preferable to court trials because they tend to cost less time and money. Settlements are covered by liability insurance.

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