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Full and Final Settlement

  • Full and Final Settlement is a phrase used to bring a dispute to and end.
  • An offer of Full and Final Settlement may be made 'without prejudice' i.e. a goodwill gesture or genuine compromise to avoid the greater cost of litigation, or loss of reputation, even if the offeror is convinced he would win in court - since there are no winners if justice is more expensive than the value in dispute.
  • Acceptance will normally bring the dispute to an end.
  • However, this phrase must not be used as leverage to apply undue influence when that which is offered is merely what the recipient is entitled.
  • Nor should a litigant take advantage of such knowledge when threatening litigation knowing his adversary will likely aquiesce to an extortionate demand, the defense of which will cost disproportionally more than the value of any claim.
  • A court or any regulatory body could dismiss such acceptance of payment under duress.
  • A desperate litigant may have no real choice but to accept such an offer, if desperate to meet financial commitments.
  • If, say, a tenant is entitled to receive the return of a deposit or refund of rent, then offering those entitled to such payment is merely fulfilling a legal obligation to return what is held "in trust".  The rightful owner and recipient should not be obliged to accept what is owed in exchange for not claiming any other legal entitlement.
  • Such tactic is therefore a breach of trust.  Far from a goodwill gesture, this is a form of extortion to avoid dealing with a bigger issue or more serious complaint.
  • Draft ContractWithout Prejudice and Subject to Contract
Published: 28 September 2015 Last Updated: 17 November 2021