The Enforceability of Settlements and Settlement Agreements in Iowa

By Tom Murphy | Hopkins & Huebner, P.C.| Adel Office

Sometimes, one party to a legal settlement has buyers’ remorse and wants to back out of it. In very few cases, it’s possible for a party to get out of a settlement agreement. The majority of settlements, however, will be enforced by the courts.

Most civil legal disputes, whether they involve family law, personal injury cases, or litigation about business matters, are settled out-of-court. There is uncertainty involved with going to court.  One side usually “wins” and the other side is usually unhappy. Settlement of cases lets the parties determine how their issues are resolved. It usually allows both parties to be somewhat happy with the outcome.

In Iowa, courts view settlements as a favorable outcome of legal disputes. The courts favor settlement of controversies. So, when a settlement can replace a trial of claims which are disputed, courts will strive to enforce it.

Why are settlements enforced?

Settlements do away with the need for further legal proceedings. Parties involved in litigation usually spend substantial amounts of time and money on their cases. The financial costs skyrocket when cases go to court.  The courts are usually busy too. Settlements allow parties, and the courts, to save time and resources. And, again, settlements remove the uncertainty that comes from trying a case and letting a judge or jury decide the outcome.

Also, settlements are contracts. Courts usually enforce contracts. Once there has been an offer to settle, an acceptance of the offer, and everyone is clear regarding what is being settled, then the settlement is a contract. If they are clear, oral agreements to settle can be enforceable contracts.

The parties should be clear on what they are settling. The acceptance of the offer to settle must agree with all the terms of the offer. Once the parties have mutually agreed to all of the terms of the settlement, it can be enforced.  If there are substantive terms not agreed upon, the settlement will not be enforced.  It’s important to be sure the parties understand everything to which they have agreed. Most people know they want to settle and they do so successfully.