ADR Settlement Agreement Drafting 2

Question 1

Which clause in a settlement agreement prevents parties from making public statements that disparage each other?

Accepted Answer

Non-disparagement clause

Answer

A non-disparagement clause specifically prohibits parties from making negative or derogatory statements about each other publicly.

Question 2

When a settlement agreement requires payments over time, which provision should specify consequences if a party misses a payment?

Accepted Answer

Acceleration clause

Answer

An acceleration clause makes the entire remaining balance due immediately upon a missed payment, protecting the receiving party.

Question 3

What is the purpose of including recitals at the beginning of a settlement agreement?

Accepted Answer

To provide background context and the basis for the agreement

Answer

Recitals provide narrative background explaining why the parties entered into the agreement and the dispute being resolved.

Question 4

A party wants to settle a lawsuit without admitting fault. Which provision accomplishes this?

Accepted Answer

No-admission-of-liability clause

Answer

A no-admission-of-liability clause explicitly states that the settlement does not constitute an admission of wrongdoing by either party.

Question 5

Which type of release in a settlement agreement waives all claims, including those the releasing party does not yet know about?

Accepted Answer

General release

Answer

A general release extinguishes known and unknown claims, often requiring California Civil Code § 1542 waivers in California disputes.

(ADR) Alternative Dispute Resolution Certification Practice Test