What is Good Faith Settlement?
A settlement reached between the plaintiff and one of multiple defendants that is made in good faith and reflects a reasonable estimate of that defendant's proportional liability.
Understanding Good Faith Settlement
In cases with multiple defendants, one defendant may settle before trial. The court must determine whether the settlement was made in good faith to protect the settling defendant from cross-claims by non-settling defendants. A good faith settlement typically reduces the plaintiff's total recoverable damages by the settlement amount.
Examples
- 1One of two defendants in a car accident settling for their share of fault
- 2Subcontractor settling early while general contractor proceeds to trial
- 3Hospital settling a malpractice claim while the surgeon continues to defend
Related Terms
Settlement
An agreement between parties to resolve a legal dispute without going to trial. Settlements typically involve the defendant paying the plaintiff an agreed-upon sum in exchange for dropping the lawsuit.
Joint and Several Liability
A legal doctrine that allows a plaintiff to recover the full amount of damages from any one defendant, regardless of that defendant's individual share of fault.
Comparative Negligence
A legal doctrine that allows damages to be apportioned based on each party's degree of fault. The plaintiff's recovery may be reduced by their percentage of fault.
Settlement Demand
A written demand from the plaintiff to the defendant or their insurance company requesting a specific amount of compensation to resolve a personal injury claim.
Demand Package
A comprehensive package of evidence, documentation, and legal arguments assembled by the plaintiff's attorney to support their settlement demand.
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