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Godknows Hofisi
Business & Law
A Deed of Settlement (called Deed in this article) is a document widely used by parties in a legal dispute or litigation to resolve their dispute.
The Deed is an agreement that captures what the parties to a dispute would have agreed instead of waiting for the court to make a determination or ruling after full trial or hearing of an application, as the case maybe.
The parties agree on certain positions in lieu of what the court may decide if requested to. They then reduce their agreement into a Deed which they then sign through their lawyers.
Key Components of a Deed of Settlement
A Deed of Settlement is essentially an agreement, usually not to continue with litigation but to resolve the matter amicably in a certain agreed way. The main components of a Deed include those explained below.
The parties
Like any agreement the parties to the Deed have to be clear and stated. These are usually the parties in the litigation or court proceedings such as the plaintiff and defendant or applicant and respondent.
Recitals or preamble
This part is meant to give the background to the Deed of Settlement. One usually finds wording such as “WHEREAS” and “AND WHEREAS” and so on. The recital or preamble may state that the parties are litigants in a certain case and quote the case reference.
The Deed may also state that the parties have agreed to resolve their dispute amicably in a certain manner recorded in the Deed such as the debtor agreeing to pay the creditor a certain amount per terms and conditions agreed in the Deed.
Operative part
This is the most important part as it outlines who shall be responsible for what to settle the dispute. For example, it may state that the debtor, who may be the defendant in the court case, shall pay the creditor, who may be the plaintiff in the court case, a certain amount of money in terms of certain terms and conditions as agreed in the Deed.
The party clarifies who is responsible for what, by way of agreement, instead of the court deciding based on submissions made by the parties in court.
The Deed may also state what will happen in the event of default by a party, for example the debtor or defendant. It may state that the full amount shall become full and payable or that the plaintiff may apply for provision sentence or get any other remedy available at law, as parties may agree.
In this part — it is also stated what the effect of the Deed will be on the pending legal proceedings. Parties may agree that the aggrieved party shall withdraw the matter before the courts.
Depending on the situation, parties may in fact use the Deed of Settlement to apply for a consent order from the court. It will not be appropriate to sign a Deed of Settlement without addressing how the matter pending before the courts shall be disposed of.
Applicable laws
Like other agreements, a Deed may also state that the laws of Zimbabwe are applicable.
Costs
It is common to find the issue of costs addressed in the Deed. For example parties may agree that each party bears its own costs or that the defendant or respondent shall pay something to the plaintiff or applicant, as the case maybe.
Confidentiality
It may be the intention of the parties to resolve their issues away from the public domain. As a result parties may agree to include a confidentiality clause.
Advantages of a Deed of Settlement
The following are some of the advantages of a Deed of Settlement signed by parties:
Before executing a Deed of Settlement parties have the opportunity to negotiate and agree. For example, a debtor and creditor will have to agree on the amount to be paid and the payment terms.
It is faster to negotiate and finalise a dispute using a Deed. For example if there is an agreement the debtor will settle and the matter before the court withdrawn or the Deed made an order of the court.
The dispute will be resolved amicably leaving room for future engagement.
Conclusion
A Deed of Settlement is an important document at law as it is used to resolve disputes amicably and faster.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deal and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit./He writes in his personal capacity. He can be contacted on +263 772 246 900 or [email protected]
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