Legal Definitions - nuisance money

Nuisance money refers to a small payment made to resolve a legal claim, often one with questionable merit, primarily to avoid the greater expense, inconvenience, and uncertainty of defending against the claim in court. It is a pragmatic decision to make a minor payment to make a "nuisance" problem disappear, rather than incurring significant legal fees and time fighting it, even if the paying party believes they would ultimately win.

Here are some examples illustrating nuisance money:

• Example 1: Consumer Complaint

  A customer purchases a low-cost item from an online retailer and later claims it was defective, demanding a full refund and threatening to file a lawsuit in small claims court. The retailer, confident the product was not defective and that the customer's claim is exaggerated, might still offer a partial refund of, for example, $50. This payment is considered nuisance money because the retailer is paying it not due to an admission of fault, but to avoid the time, legal fees, and administrative hassle of responding to a lawsuit, which would likely cost far more than the small refund.

• Example 2: Minor Personal Injury Claim

  During a crowded event, two people lightly bump into each other, causing one person to stumble but not visibly injure themselves. A few days later, the person who stumbled sends a letter demanding $750 for "emotional distress" and "potential future chiropractic visits," threatening legal action. The other person's insurance company, after reviewing the incident and finding no evidence of significant injury, might offer a settlement of $200. This is nuisance money because the insurance company is making a small payment to close the claim quickly and avoid the much higher costs associated with investigating, negotiating, and potentially litigating a minor claim, even if they believe the claim has little legal basis.

• Example 3: Property Dispute

  A homeowner receives a formal letter from a neighbor alleging that a small portion of their garden fence slightly encroaches onto the neighbor's property by a few inches and demanding $1,000 to cover the cost of a new survey and fence removal. The homeowner believes the fence is correctly placed or that the encroachment is negligible and not worth a legal battle. To avoid a protracted and potentially expensive dispute with a neighbor, the homeowner might offer a payment of $250 to resolve the matter. This payment serves as nuisance money, as it is made to prevent a minor issue from escalating into a costly legal conflict, even if the homeowner feels they are in the right.