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Consider When to Get A Release Of Claims

On Behalf of | Jul 16, 2009 | Business Transactions, Employment Law

Occasionally in business one must deal with a disgruntled vendor, customer, current or former employee. Sometimes that person’s reasons for being disgruntled may be legitimate, sometimes they may be unjustified. As business people, we sometimes make a decision to resolve a matter by paying a disgruntled individual with monies, goods or services. In such a circumstance, careful consideration should be given to whether it would be prudent to get a release of claim in exchange for those monies, goods or services.

Speaking with your attorney can help you to decide whether to do such a release and exactly how to proceed. Your attorney can help determine whether under the circumstances a simple e-mail exchange you and the disgruntled individual memorializing the settlement will be sufficient. It may be that it would be more prudent to draft a several page settlement agreement and release as is often used in a severance agreement with a former employee as well as in resolving larger claims with vendors and customers. The money you spend for your attorney to document the deal to preclude that disgruntled individual from later hiring a lawyer and bringing a lawsuit is money well spent.

As an example, should a customer demand a refund for a product they claim is defective and you decide to provide such a refund, it might be prudent to get a release so that he does not later bring a lawsuit against you claiming he lost profits, had to pay more for a replacement. A former employee with a wrongful employment termination claim may very well take severance payment from you and still bring the claim if he has not signed a release of claim.

In summary, when you are considering coming to a compromise in a business dispute whether with a vendor, customer, or employee, it is often wise to speak to your attorney to determine whether a release of claims is appropriate. If it is advisable, have the attorney advise as to the breadth of the release and perhaps have that attorney draft or at least review the proposed release.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].