Legal Definitions - nuisance settlement

Term: Nuisance Settlement
Definition: A nuisance settlement is an agreement between two parties to end a dispute or lawsuit. The defendant pays the plaintiff a sum of money purely for economic reasons, rather than admitting responsibility. This is because the defendant would spend more money on legal fees and expenses caused by a prolonged legal battle than in paying the settlement amount. The money paid in such a settlement is often called nuisance money.
Example: A company is accused of polluting a river and causing harm to the environment. The company denies responsibility but agrees to pay a sum of money to the plaintiff to settle the case. The company does this because it would cost more to fight the case in court than to pay the settlement amount. This is an example of a nuisance settlement.