When a married couple is going through a divorce, among the issues occurred is the division of property. The divorced couple might have joint assets such as bank account, house, business and other property. In court procedure, each person is entitled to half of the property if they can prove their shares in it. The party who cannot prove his or her ownership to the property only entitled to 30% of the property if there are proof of non-direct contributions.
This is where a settlement agreement can be useful. It is recommended between the disputed parties to have a settlement agreement drafted if they would like to skip the litigations procedures in Court. For instance, one unit of house is financed by both husband and wife equally but the title of the house is registered under the name of the husband only. The husband is entitled to the property by law, but the truth is, both parties should be entitled by half shares of the house.
Having a break-up is already a painful event itself. Therefore, having a valid contract will save the grieving parties from these painful issues and will allow the parties to save time and costs along the process. Having a well-drafted settlement agreement help the parties to make decision while ensuring their rights are safeguarded.
1) A Valid Contract
In Malaysia, the settlement agreement is governed under the Contracts Act 1950. A settlement agreement contains contractual terms which are mutually agreed upon to bring the legal issues or disputes to an end. A party seeking to enforce a settlement agreement is generally confined to filing civil proceedings for breach of an agreement. In other words, a party must first obtain a valid judgment before the settlement agreement can be enforced.
2) Alternative Dispute Resolution
A settlement agreement is appropriate medium to settle the dispute if the legal proceeding has not yet commenced. The parties shall appoint their own lawyer to draft and review the settlement agreement.
3) Confidentiality
Any settlement terms between the parties that had been mutually agreed will be keep in private and confidential, as it will not be open to public. Parties may propose to include the confidentiality clauses in their settlement agreement.
4) Ability to vary terms
If a party founds any terms in the settlement agreement is unfair to him, the lawyer in charge can make amendments to the terms and it can be negotiated with the other party until both parties agreed to the terms.
Different types of disputes will include different terms and considerations. Drafting a settlement agreement involves a lengthy process to ensure all matters are covered to protect the rights of parties. Thus, it is best for parties to seek legal advice in the process of settlement.
