A settlement agreement should be drafted with the assumption that it will be read by someone looking for ambiguity.
Parties and releases. Identify releasing and released parties precisely, including affiliates, officers, directors, employees, insurers, successors and assigns. Decide whether the release is mutual and whether it covers unknown claims, which in some states requires specific statutory language to be effective.
Scope. Claims arising from the identified matter, or all claims to date? Both are legitimate; the difference is large and should be deliberate.
Payment. Amount, timing, method, allocation among claims where tax treatment differs, and consequences of late payment — interest, acceleration, confession of judgment where permitted, or stipulated judgment held in escrow.
Dismissal. With prejudice, who files, when, and who bears costs. Retention of jurisdiction to enforce should be requested from the court expressly if the parties want it.
Confidentiality and non-disparagement. Define permitted disclosures — tax, legal, accounting, regulatory — and remedies. Recognise that some claims cannot be made confidential by agreement.
No admission of liability, and a clause stating the agreement is not admissible except to enforce it.
Conditions and warranties. Authority to sign, no assignment of claims, and tax reporting responsibilities.