Duhaime's Law Dictionary


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."

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