Release Provisions in Commercial Agreements: Drafting, Review, Negotiation and Enforcement

Description

Parties often fail to appreciate and thoroughly assess the potential significance of contractual release provisions, making the mistake of thinking that release language in a settlement agreement or contract modification is mere boilerplate. But not all release provisions are created equal, and they are usually skewed to favor one party over another.

Recent cases highlight the importance of carefully-crafted release provisions. To cite one example, the recent Seventh Circuit Court of Appeals decision Engineered Abrasives Inc. v. American Machine Products & Service Inc. shows that counsel ignores these provisions to their peril. There, the court enforced a release precisely as written, denying Engineered Abrasives the opportunity to collect on a default judgment of more than $700,000. The opinion sets forth that "The settlement agreement contains no other release provision that might create an ambiguity. The clause is unambiguous and, as it says, releases all claims and liabilities between the parties--including the earlier default judgment."

Inserting boilerplate release provisions into a settlement agreement or contract modification can unintentionally defeat the contractual intent of the parties and cause significant unforeseen losses. Best practices demand that counsel carefully negotiate and draft these provisions to adequately protect client exposure.

Listen as our authoritative panel of seasoned practitioners unpacks the nature and importance of release provisions, reviews case studies and examples of boilerplate versus tailored release provisions, and provides practical, actionable guidance for drafting, negotiating and enforcing release provisions.