The contract by which insurer and claimant end their dispute through mutual concessions, and which closes the courts on the same subject.
A settlement agreement is a contract by which the parties end an existing dispute, or forestall one, through mutual concessions. Those two words are the condition of its validity: without concessions on both sides there is no settlement but a unilateral waiver, which a court may set aside. Its effect is powerful, since it bars bringing or continuing an action with the same subject between the same parties, which makes it the normal way to close a contested claim. It differs from a discharge receipt, which records a payment and presupposes no prior dispute, and from arbitration, which entrusts the decision to a third party instead of deriving it from agreement. Its most delicate application remains bodily injury, where the claimant settles a future harm they cannot measure, which is why practice expressly reserves the case of deterioration. The problem solved is the cost and duration of litigation, which often exceed the real gap between the parties' positions.
France's judicial modernization act of November 18, 2016 rewrote article 2052 of the Civil Code: a settlement no longer carries the force of a final judgment, a formula inherited from 1804, but bars bringing or continuing an action with the same subject. The redrafting clarified what practitioners already knew, namely that a settlement is challenged for defective consent and not by way of appeal.
protocole transactionnel, accord amiable de règlement