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  • Settlement agreements are a familiar form of document routinely used by lawyers to enable clients to resolve disputes.
  • Lawyers need to ensure client instructions are fully reflected in the settlement agreement and that the document does not inadvertently extinguish rights which the client believed it continued to enjoy.

Using an agreement to extinguish a legal claim, whether under contract or otherwise, is a measure routinely used by most lawyers. Settlement agreements have the benefit of providing certainty to parties and avoiding the cost and risk of litigation. While they have undoubted benefits, a recent decision in the Supreme Court of Queensland illustrates the need for lawyers to exercise caution when drafting settlement agreements and providing advice on their operation and effect.

The case of IBM Australia Pty Ltd v State of Queensland [2015] QSC 342, is only a first instance decision and therefore does not have particular precedential value. However the judgment does provide a practical case study on the operation of settlement agreements and the issues that lawyers should address when preparing them. (This case note does not suggest any lack of diligence on the part of the lawyers who acted for either party.)

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