HagenowDid you know that in the event a business dispute ends up in court, that any settlement discussions or negotiations that occurred before the case goes to trial are not admissible? In other words, the judge or jury will never hear how much one side was willing to pay, nor how much the other side was willing to take, to resolve the dispute.

Many business people are reluctant to engage in active settlement discussions because they are concerned that they re setting a floor or ceiling for what they may ultimately have to pay or can receive. However, because both the Indiana Rules of Evidence and the Federal Rules of Evidence do not allow evidence to be presented concerning settlement negotiations or “offers to compromise”, the parties should feel free to actively negotiate to settle their differences without fear of those negotiations later being revealed to the court.

It is a good practice to reference the fact that any offer or proposal being made is being made for purposes of discussions. If the proposals are in writing, then the writing should clearly state, preferably at the beginning, that the proposal is being made for purposes of settlement discussions and is not admissible as evidence.

Do keep in mind that if the negotiations are verbal as opposed to in writing, if an agreement is reached, an oral contract likely has been created, and oral contracts are enforceable as a general rule.

Therefore, it does not hurt anything from a legal perspective to make a concerted effort to settle your dispute because of the financial and emotional expense of litigation.