Hull City also alleged Duffen's company received payments from agents in return for allowing those same agents to negotiate transfers on the club's behalf.
A statement read: "Further to a statement made on 22 January 2010 regarding legal action commenced by Hull City against its former chief executive officer, we are pleased to confirm that we have agreed settlement on terms satisfactory to the club.
"This agreement brings to an end all disputes between the parties."
Duffen arrived at Hull in 2007 leading a consortium that bought out then-owner Adam Pearson and taking charge of a club with no debt.
Having overseen the club's promotion to the Premier League and narrow survival last season, Duffen resigned in October last year amid grave concerns over the club's finances.