Settlement agreement in Italy

The purpose of the settlement agreement is:

 

- to come to an accommodation, to overcome and finish a dispute;

- to settle current or future disputes in an informal way through renunciation of the assessment of the reason of each of the parties: each party , in fact, changes, in whole or in part their own claims in exchange of a mutual concession of the other.

 

As a consequence of the mutual concessions, each party will obtain the recognition of less rights with reference to those it would have intended to achieve through a legal dispute, but these rights will still be greater than those that the other party would be willing to recognize him.

 

In Italy the settlement agreement (called “transazione”, it can be translated also into “transaction”) is ruled by art. 1965 of the Italian civil code, it provides that the contractual parties can make mutual concessions in order to end a pending dispute or to prevent a dispute that could arise (first paragraph of art. 1965 cc which concerns the so-called "pure transaction").

 

While the so-called "mixed" transaction, ruled in the second paragraph of art. 1965 cc, states that the contractual parties can - by mutual concessions – create, modify, extinguish also those mutual relationships that were not claimed or disputed by the parties.

 

In order a settlement agreement to be validly and effectively fulfilled, the parties must be able to perform legal acts, so that, each of the parties has to possesses the legal capacity and the ability to sign an agreement, in fact, for this aim, the paragraph one of art. 1966 of the Italian civil code, provides that in order to settle the parties must have the ability to dispose of the rights object of the settlement; the second paragraph states that the transaction is void if these rights - by their nature or due to express provision of the law - are out of the availability of the contracting parties.

 

So, the settlement can do by natural persons who have acquired the ability to do legal acts, and by legal persons.

 

The power to do a settlement by the minor, the interdict, the emancipated and incapacitated is ruled by articles 320; 375; 394 and 424 of cc.

 

Form of the settlement

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According to the art. 1967 of the Italian civil code, the settlements must be proven in writing “ad probationem”, whose cases are enlisted in art. 1350, from no. 1 to no. 11 of the cc, must be drawn up by public deed or private writing, under penalty of nullity.

Furthermore, under the provisions of art. 2684, no. 4 of the Italian civil code must be done in writing form and then registered in public register those settlement involving disputes concerning contracts:

- of the transfer of ownership or constitution of a communion;

- of constitution or change of rights of usufruct or right of use or the transfer of the right of usufruct and the deeds between living persons to waive the rights indicated

For example, the settlement of deeds concerning real estate rights must be drafted in the form of public deed or private deed authenticated by a notary, for then be registered in the real estate registers.

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Object of the settlement

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As per art. 1346 of the cc, the object of the settlement must be:

- possible;

- lawful;

- determined or determinable.

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Validity of the settlement

 

As per paragraph 2 of art. 1966 of the Italian civil code a settlement is void if:

 

- the right in question is out the availability of the parties;

- the rights on which there is no power to renounce, such as, for example, the right to personal freedom, the right to name, the right to life (etc.).

 

They are also void those settlements concluded as a result of violence and / or willful misconduct against the other contracting party.