Settlement (§779 Federal Law Book)

Legal proceedings concerning the uncertain legal position between two parties can be solved by agreeing on a settlement in which both parties compromise. Such an agreement is called a settlement.

A settlement can be agreed either out of court or in court.

If a settlement is agreed in court then the agreement contained therein can be enforced by the creditor immediately because this so-called court settlement equals an enforcement order.

Settlements agreed out of court cannot be used for enforcement purposes since they merely involve a mutual agreement which the creditor has to bring before court in order to obtain an enforcement order.