When drafting settlement agreements and releases, some practitioners just pull up old forms or cut and paste release language from prior agreements into the new document. Many times, this includes a waiver of Civil Code section 1542, which is the Civil Code section that states that a general release does not include unknown claims. If parties are going to effectively waive Civil Code section 1542, it is vital that the language be correct.
Effective in 2019, the new Civil Code Section 1542 reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
