Can a Settlement Agreement Be Rescinded

A settlement agreement, also known as a compromise agreement, is a legally binding document between two parties that resolves a legal dispute. In some cases, one or both parties may later regret agreeing to the terms of the settlement and seek to rescind or undo the agreement. But, can a settlement agreement be rescinded?

The short answer is that it’s possible but not easy. Once a settlement agreement is signed, it becomes a legally binding contract that is enforceable in court. This means that it can only be rescinded under certain circumstances.

One of the main reasons settlements may be rescinded is if there was a mistake made in the agreement. A mistake can be either a clerical error, such as a typo or a math mistake, or a mutual mistake by both parties about a material fact. If the mistake is significant enough, it may provide grounds for rescission.

Another reason a settlement agreement could be rescinded is if one of the parties engaged in fraud or duress. Fraud occurs when one party intentionally misrepresents or conceals material facts related to the agreement. Duress, on the other hand, occurs when one party uses threats or coercion to force the other party to agree to the settlement terms.

In addition to these grounds, a settlement agreement may be rescinded if it violates public policy or if the terms are unconscionable. If the settlement contains provisions that are illegal or against public policy, they can be thrown out. If the settlement is so one-sided that it shocks the conscience of the court, it may also be deemed unconscionable and unenforceable.

It’s important to note that if a settlement agreement was signed and accepted without any of these issues, it’s unlikely that it can be rescinded. Settlement agreements are designed to provide a final and binding resolution, and courts are hesitant to undo them absent a compelling reason.

In conclusion, while it’s possible to rescind a settlement agreement under certain circumstances, it’s not easy. Parties should carefully consider the terms of the settlement before signing and seek legal advice if they have any concerns. Once a settlement agreement is signed, it becomes a legally binding contract that is generally enforceable in court.