Civil Litigation
Oct. 13, 2022
Linking settlement payments to future sources of funds
Parties sometimes choose to secure a settlement payment by linking it to a specific future source of funds. If so, counsel should ensure the agreement expressly states whether the payment obligation is – or is not – contingent on that particular source of funds materializing.
Denise Madigan
Mediator
MadiganADR
Denise has been a full-time mediator and adjunct professor for over 25 years. She also has taught mediation to thousands of lawyers, judges and other professionals all over the world.
Last month a California appeals court considered whether a settlement agreement requiring the proceeds of a pending sale of specific property to fund the settlement amounted to a condition precedent to the payment obligation. When the property sale fell through, the payor refused to make the promised payment, and the payee sued to enforce the settlement. The payor argued that because the pending sale was intended to fund the settlement, the payor had no obligation to...
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