NALA Certified Paralegal Exam 2025 – 400 Free Practice Questions to Pass the Exam

A settlement agreement is a legally binding document that is created when parties involved in a dispute reach a mutually acceptable resolution without the need for a trial. It serves to effectively resolve the issues in dispute outside of the court system, which can save time, reduce legal costs, and provide a more flexible outcome that may better meet the needs of both parties. By arriving at a settlement, parties can maintain control over the terms of their resolution rather than leaving the matter to a judge or jury.

In contrast, other options refer to different legal processes. For example, initiating legal proceedings pertains to starting a lawsuit rather than resolving an existing one. Forcing a party to comply with a previous ruling refers to enforcement actions stemming from a court's decision, while documenting the final judgment of a case relates to the official record of a trial's outcome. Each of these options highlights different aspects of legal procedures, but none capture the primary purpose of a settlement agreement.