It is common for conflicts to arise between natural and legal persons, as a result of the intense commercial traffic carried out day by day, due to all kinds of causes of very varied natures, and which, from a legal and economic perspective, can be reduced to a common element in each case, namely, the potential harm that all these conflicts represent to the assets of those involved.
Based on the foregoing, it is common that, by virtue of private autonomy, those involved in conflicts arising from the performance of civil or commercial contracts, for example, resort to the settlement agreement as a means to settle them, and yet, it is common that many times the true nature of the contract, its minimum content, its legal effects, and, of course, its limitations are unknown.
To begin with, it is necessary to define the contract addressed from its legal nature. The settlement agreement is the transactional figure provided in the Colombian Civil Code to regulate the institution of settlement, which constitutes an autocompositive method of conflict resolution. In other words, the parties themselves will define, according to their interests, the essential content of the conflict that will ultimately be recognized, in accordance with the agreement reached.
From the aforementioned definition, one of the essential elements of the settlement agreement can be observed: the conflict regarding a subjective right. In any case, the conflict can be reduced to one party exclusively attributing to itself a right over an asset, that the invoked right entails the obligation of the other party as debtor due to some relationship established between them, or, alternatively, that one of the parties, without denying the existence of the right as such, contests the extent of the obligations incumbent upon it.
The conflict over the subjective right may be current at the date the contract is signed, but also, the agreement may be signed by the parties with the manifest intention of preventing a possible conflict that might be brought before another instance, such as the judicial one, which from any perspective would be more costly for the parties. In both cases, it is necessary that “that tension of opposing interests has not been definitively remedied, as a consequence of a legal act or a jurisdictional decision”[1]
From the aforementioned caveat, the impossibility of settling a dispute that has been concluded and decided through a final judicial resolution becomes evident, in addition to the fact that the conflict to be settled must concern subjective rights of a patrimonial nature, or in other words, that can be economically valued.
The second essential element of the contract will be the reciprocal concessions that each of the signing parties makes by virtue of the conflict and by reason of the subjective right in dispute. Thus, the settlement agreement is not reduced to one of the parties yielding to the interests of the other, unconditionally renouncing any future claim through other means available to it, but rather as a true concert of wills that it is. The parties will make mutual concessions, sacrifices, generating reciprocal obligations for both parties, as happens with any bilateral contract.
Now, the Law says nothing regarding whether such concessions must be equivalent for the settlement agreement to be understood as reached; however, we believe they must be, since the logic of the contract implies, even if hypothetically, that both parties reach through the agreement a middle ground consistent with the conflict raised.
The third and last essential element of the contract under study will be the manifest intention of the contracting parties to put an end to the uncertainty surrounding this type of conflict, and, through the autocompositive method, regulate their own interests contractually without the intervention of the State's justice system.
“Taking these elements into account, settlement has been defined more precisely, expressing that it is the agreement in which the parties, partially sacrificing their claims, put an end extrajudicially to a pending dispute or prevent an eventual dispute”[2]
Thus, as an essential element of the contract, the absence of a conflict regarding the right in question results in the non-existence of the aforementioned contract or, failing that, it will degenerate into a different one.
Regarding the content of the settlement agreement, it must be said that the parties, through the contract, redefine the essence of the conflict, that is, the extent of the disputed subjective right, adjusting it, as long as it does not conflict with rules of public order, according to the content of the pact that suits their private interests.
According to the above, it is important to highlight that said pact implies moving away from the legal consequences provided by the rules that establish the regime of the right in dispute, which would be applied if the conflict were brought before a judge, so that, once the agreement is signed, the parties depart from what the rule establishes and effectively adapt the content of the disagreement to what is specifically agreed, extinguishing the obligations that each party considered were incumbent on the other, creating new obligations derived expressly from the content of the settlement agreement.
[1] Supreme Court of Justice, Civil Cassation Chamber, SC1365-2022, Reporting Judge Luis Alonso Rico Puerta
[2] CSJ SC, Oct. 29, 1979, G. J. t. CLIX, pp. 301 to 305
Andrés Ogonaga. – CONSULTING LAWYER AZC