The general definition of a settlement, according to the Oxford Dictionary, is an agreement that finishes an argument. It has a specific meaning in a variety of situations, including civil legal actions and business applications.

Significance

In any civil action, a settlement will draw to a close the court case that was filed. It saves both parties to the suit the lawyer's fees that would be paid had the case gone through the full court process, which many times can take years.

Civil Suit

In a civil suit, the plaintiff who filed the suit, typically is suing for a certain dollar amount based on his perception that he was wronged and the defendant is responsible. A settlement means the two parties, outside of court, reached an agreement on a reduced sum of money.

Domestic Suits

When two parties are in a divorce case, the settlement agreement frequently involves one party compromising with the other on property divisions, alimony or child support or even custody of a child.

Business

A settlement in this sense can involve property, securities or other applications that involve a buyer and seller. For example if you traded securities, the security must be delivered by the settlement date, typically three days after the trade. In real estate, it is the final conveyance of the property to the buyer.

Viatical Settlement

A viatical settlement is an arrangement in which an investment company purchases the life insurance policy of a terminally ill patient, at 50 to 80 percent of its face value to provide the ill patient with funds for her treatment. While the patient is still alive, the buyer continues to pay the premiums of the life insurance policy and subsequently receives the death benefit when the insured dies.

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Viatical Settlement

Detailed explanation of civil settlements

Business settlements