Settlement Agreement Failure – Can a Party Back Out? Can a Judge Refuse to Approve the Agreement?

In the vast majority of cases, and end in settlement agreements. This benefits all parties, as they maintain more control over their case and can craft individualized solutions for their families and their futures. With mediation and collaborative law becoming more and more common, there is no sign that this trend will slow or stop any time soon.

In most of these cases, the settlement agreement—once signed by both parties—is entered by the court and incorporated into a court order. However, there are some times when one or both parties decide that the settlement agreement no longer suits them and they will try to back out.

Can You Back out of a Settlement Agreement?

If both parties agree to set aside the settlement agreement before it is incorporated into a court order, then it is a fairly simple issue to rescind the agreement and start over. The real problems come when only one party no longer agrees.

Can a Settlement Agreement Be Modified in NJ?

When a party requests the court to enter a settlement agreement, the court will almost always simply make it a part of a court order, without delving into the reasons behind the agreement. Courts and the law make the assumption that parties understand the agreement and understand the rights and responsibilities arising therein.

If one party wants to modify, or in some cases set aside, the agreement, there will only be a couple of methods available to him or her.

  • Fraud – One way is for the party to show that the agreement was based on fraud or was not entered into in good faith. For example, if a spouse hides assets or income, then that could be a reason to set aside a settlement agreement dealing with asset division, spousal support, or child support.
  • Substantial Change in Circumstances – Another way is for the party requesting to change the agreement to show that there has been a substantial change in circumstances. This could happen where one party gets an substantial raise after the agreement, gets transferred to a distant city, or a child’s needs dramatically and unexpectedly change following the signing of the agreement. In any of these sorts of instances, the requesting party would need to show the court that the situation has unexpectedly and drastically changed such that it is no longer fair or appropriate to enforce the agreement as written.

Can a Settlement Agreement Be Dropped or Set Aside in NJ?

In some rare cases, a judge may also decide to set aside a settlement agreement. This could be possible where the agreement on its face is so one-sided as to be unconscionable. This does not mean that the agreement is merely unfair; rather, it needs to be so drastically unfair that justice requires that it not be enforced.

Getting a settlement order entered is an essential step in your divorce. We have helped many clients complete agreements and successfully enter them as court orders. or call us today at (732) 529-6937 to talk about your case.

About the Author


John Nachlinger is a co-founder and managing attorney of Netsquire, a family law firm focused on streamlining divorces through effective mediation, settlement drafting, and court filing assistance. As a New Jersey Supreme Court Certified Matrimonial Law Attorney and Qualified Mediator, John guides couples toward equitable agreements without the cost and stress of litigation.

Recognized as a New Jersey Super Lawyer for over a decade, John’s client-focused approach aims to foster understanding during challenging transitions. With a background spanning top law journals, judicial clerkships, and boutique family law firms, John now applies his analytical skills to create workable solutions for all parties. His mediation services reshape the divorce journey by prioritizing compassion and compromise.

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