What Are The Risks of Signing a Deed of Settlement Without Legal Advice?

You may believe that settling your disagreements through a deed of settlement and release in Perth (e.g. employment issues, commercial issues, and ending business partnerships) is a very easy way to resolve conflicts quickly. Still, most people or companies fail to consider the legal consequences of the settlement on themselves in the long term. You should not sign a settlement deed until you have full knowledge of the entire nature and consequences of what you are agreeing to, or you could be giving away important rights and exposing yourself to future debts.

If you choose to settle by way of a settlement deed, you should consider the risk associated with doing so prior to finalising your agreement.

Understanding a Deed of Settlement in Australia

A deed of settlement is a legally binding document in Australia, which allows for the settlement of a dispute between 2 parties without court action.

Once the parties have signed a deed of release Australia, you are naturally barred from taking any further legal action against the other party (the party with whom you are in dispute) regarding the subject of your dispute.

Why Legal Advice Matters Before Signing

Securing settlement agreement legal advice can help you understand the terms and scope of the agreement. A lawyer will provide a professional opinion as to whether the terms are appropriate, enforceable, and in your best interest.

If you do not have a lawyer, you will have to rely on your understanding of complicated legal verbiage, which runs the risk of misinterpreting important provisions.

Key Risks You Should Be Aware Of

Before signing any deed of settlement, it is essential that you understand what your risk exposure may be, and what you may not realise are risks.

So if you don’t get a chance to review it carefully, you could potentially expose yourself to risks in many areas.

1. Giving Up Significant Legal Rights

The biggest aspect associated with risks of signing a Deed of Settlement without legal advice is that you may be giving up your rights without even knowing it. Many deeds include very broad release clauses that prevent you from making any future claims, including future claims that you are not even aware of at the time you sign the deed.

If you were to sign a deed arising out of an employment dispute, by signing the deed, you would be prevented from making any future claims for unfair dismissal, discrimination or any unpaid entitlements.

2. Financial Risks That Are Not Obviously Visible

In addition to moving the assets to a new owner, deeds will sometimes impose on that new owner certain financial obligations (e.g. payment, indemnity, tax consequences and the like). If you do not have someone with expertise to assist you in understanding these issues, you may:

• Accept settlements that are less than what you are entitled to
• Miss taxes associated with your payment

Financial risks such as these can adversely affect both an individual and/or a business for many years.

3. Strict Confidentiality and Non-Disparagement Clauses/ Provisions

Confidentiality provisions are a common feature of deeds. They limit your ability to communicate with others about the deed. While restrictions to communication are standard, many deeds contain clauses that have been drafted in such a way as to be much more restrictive than necessary.

As a result, you may inadvertently breach the deed by:

• Talking to others about the matter
• Making any public statements (indirectly)

Penalties and/or other legal consequences exist for breaching these provisions.

4. Limited Ability To Terminate Or Modify The Agreement

In contrast to other types of contracts, a deed is generally much more difficult to terminate or modify once it is signed. Therefore;

• If you later discover the terms of the deed are unfair, you will be unable to withdraw.
• All parties to the deed must agree to any change to the deed.

The inflexibility of deeds emphasises the need to get it absolutely right from the outset.

Corporate Lawyers in Perth: The Importance of Legal Professionals

Corporate lawyers Perth have a responsibility to advocate for their clients’ best interests when negotiating. An experienced lawyer can carefully evaluate a contract and determine what, if any, issues may arise.

If any issues are found, they will assist you in negotiating changes to the terms of the contract to provide solutions to mitigate risk. Therefore, corporate counsel’s experience will allow you to resolve current disputes and protect your future position in the business community.

Conclusion

Signing the deed can release you from claiming your legal rights and place you under unforeseen legal obligations, which can seem like a minor issue at the time of signing but may turn out to be quite significant later on.

Take your time to review the agreement carefully, make an informed decision and obtain the proper legal advice from the best corporate lawyers Perth prior to entering into that agreement to ensure that you do not incur any additional costs or receive less than you expected as a result of signing the agreement.