Compromise Agreement Definition: An agreement to settle a previously existing claim with a substituted performance. Related Terms: Out-of-Court Settlement Justice Kinneary of the United States District Court (Ohio) wrote, in Globe Metallurgical v. Hewlett-Packard:"A compromise agreement is an agreement to settle a previously existing claim with a substituted performance. A valid compromise and settlement bars all right of recovery on the previously existing claim. This is so because the compromise agreement is substituted for the claim, and the rights and liabilities of the parties are measured and limited by the terms of the agreement. The previously existing claim is extinguished by the compromise and settlement and, as a result, any subsequent litigation based upon it is barred. A compromise agreement is a contract and, as such, there must be mutual assent of the parties and consideration."Perhaps stating the obvious, Justice Modarelli of the United States District Court (New Jersey), in Re Lovel Building, wrote:"A compromise is a mutual concession, a partial surrender."REFERENCES:Globe Metallurgical, Inc. v. Hewlett-Packard Co., 953 F. Supp. 876 (1996) In re Lovel Bldg. Co., 116 F. Supp. 383 (1953) Categories & Topics: Alternative Dispute Resolution (ADR) Law Dictionary Civil Litigation & Evidence Law Dictionary Find you are constantly looking up definitions? Try our search provider (works in most modern browsers) If you find an error or omission in Duhaime's Legal Dictionary, or if you have legal term suggestion, we'd love to hear from you!