By Bruce Jervis
A settlement agreement, as most contracts, can be crafted narrowly to apply to very specific matters. Or, it may be a broad, comprehensive resolution of all disputed matters. Either way, an essential element of a settlement agreement is a waiver and release of claims.
Problems arise when a party signs a settlement agreement and then ignores its language, trying to treat it as something it is not. In a recent case involving a federal project, the government settled two sets of claims. The claims involved discrete aspects of the project and problems that occurred during a three-month time span. The government continued to negotiate the contractor’s claim for the cumulative impact of delay and disruption over the 36-month contract performance period.
When the negotiations broke down, the government argued that the cumulative impact claim had been waived by the two prior settlement agreements. The government was not allowed, however, to treat narrowly tailored settlements as comprehensive, unconditional waiver and release agreements.
The take-away from this is that parties should carefully consider the scope and applicability of any waiver and release language. And, parties should be prepared to live with the results. Your comments are welcomed.
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