Justifiable Reasons to Nullify an Accident Settlement Agreement
Accident settlement agreements are like any other settlement agreements--they're agreements between two parties that set forth certain terms in order to avoid a lengthy lawsuit. Most cases end up in a settlement because settlements provide quick results and avoid costly litigation.
There are times,however, when a settlement agreement needs to be nullified. These situations are few and far between and usually difficult to demonstrate in court. Nevertheless, sometimes justice recognizes that an accident settlement agreement needs to be voided. It is always wise to seek the advice of an attorney during accident settlement agreement negotiations.
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Fraud
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An accident settlement agreement can be nullified if one party can show fraud by the other party.
Imagine that you are in a car accident, and you are in settlement talks with the other driver. The other driver has consistently stated that he or she had a green light. Based on this assertion, you agree to settlement terms. The very next day, you find out the other driver has told a lot of people that he or she, in fact, had a red light, ran that red light and intended to lie about this fact to get a huge settlement. This deliberate lying is enough to demonstrate fraud and nullify the terms of the settlement agreement.
Duress
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The legal definition of "duress" is difficult to prove. Duress is an action or pressure that effectively robs an individual of free choice.
Any contract, including accident settlement agreements, can be nullified if signed under duress, because the courts want to ensure that both parties intended to sign the agreement. Duress destroys that intention.
Imagine that you have an accident settlement agreement with the other driver. While you two are alone, the other driver pulls out a gun and says, "I'll shoot you if you don't sign this settlement!" In the eyes of the law, this outrageous act of intimidation is sufficient to rob you of your freedom of choice.
Of course, no one needs to pull a gun on you to create duress, but the act usually needs to be outrageous to an ordinary person (for instance, a slap on your face would not be considered duress).
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Mistake-of-Fact
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There are two types of mistake-of-fact. Each one has its own legal ramifications when it comes to nullifying settlement agreements.
The first is a mutual mistake-of-fact: Both parties are mistaken about a significant fact in the case. To illustrate this point, let's say you are in a car accident. Everyone agrees you were traveling 45 mph in a 35-mph zone. This means you were driving negligently. You sign a settlement agreement based on this fact. The next day, both parties find out that the posted speed limit is, in fact, 65 mph. This is a mutual mistake, and the settlement agreement can be nullified or restructured (called "reformation") to acknowledge this fact.
The second type of mistake is a unilateral mistake. This occurs when only one party is mistaken. An accident settlement agreement can be nullified as a result of a unilateral mistake only if the outcome is unreasonable or if the non-mistaken party knew of, or caused, the mistake.
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References
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