Credit approaches include pro tanto reduction by the dollar amount paid, pro rata reduction by the settling party's share, and proportionate share reduction by the allocated fault percentage.
The applicable method varies by state.
Alternative Names:
Settlement Offset, Credit for Settlement
Why it Matters?
The method determines whether a defendant benefits from a large or small codefendant settlement, since pro tanto credit reduces the judgment by whatever was actually paid while proportionate share reduces it by the settling party's fault regardless of amount. Under proportionate share, a codefendant that settled cheaply relative to its fault leaves the remaining defendant better off. Knowing the applicable rule shapes settlement strategy among defendants.
Frequently Confused with
Related terms
Frequently asked questions
How do the credit methods differ?
Why does the method affect strategy?
