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What is a Settlement Offer on Disputed Amount?

Essentially, settlements can be made by either party by putting an end to a dispute by issuing a settlement offer. Typically, you can do this through prior settlement negotiations by the parties in good faith. Also, without prejudice to come to a conclusive settlement amount that one party owes another party. Importantly, these communications between parties are without prejudice in the sense that the information in these communications cannot be used as evidence by another party against them.

Subsequently, the terms of settlement negotiations can then be formalised into a letter sent by the party paying the amount. Typically, this expresses their proposal of compromise to pay the settled amount. Notably, this agreement is an important letter to establish as early as possible. Because it both acknowledges a compromise between the parties’ proposed amounts. Additionally, it legally binds both parties to a settled amount, should they both agree to it. Thus, avoiding one party from dishonouring the agreement.  

Key points included on Settlement Offer on Disputed Amount

  • Firstly, ensure that there is a certainty in relation to the terms set out in payment. Essentially, if the parties doesn’t deal with an issue in the dispute or something lacks clarity, then the contract may be difficult to legally enforce.
  • Secondly, it must be clear that the parties intend to achieve a final and binding settlement of their dispute.
  • Thirdly, the settlement offer must entail valid reasons for disputing the original debt proposed by the party requesting an amount of money

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