What does without prejudice mean?

"Without Prejudice" is a term that is commonly misunderstood. So what does it actually mean?

When a letter or email is marked "without prejudice" it means that parties can make offers or discuss settling a claim, without the fear that their case is compromised. Conversations on the telephone or in person can also take place on a without prejudice basis. 

The "without prejudice" rule is designed to encourage the parties to a dispute to settle without recourse to the courts. When discussions take place on a without prejudice basis, the parties can communicate freely and openly, secure in the knowledge that what they (or their lawyers) have said cannot be used against them, should the settlement discussions fail.

The rule prevents written or oral statements made in a genuine attempt to settle a dispute from being used against them later in court if the negotiations fail to achieve settlement.

Correspondence which is without prejudice would not become known to a trial judge, until after he or she had made their decision about who had won or lost the case. 

The inclusion of the words ‘"without prejudice" in a piece of correspondence, will not necessarily bring the communication within the ambit of the without prejudice rules. If a letter is not, in substance, a communication made in a genuine attempt to settle an existing dispute, then the without prejudice rules will not apply, whether or not it has been labelled "without prejudice". The surrounding circumstances must be looked at to decide whether the protection should apply. If it does not apply, the correspondence can be made known to the judge, before they make their final decision in the case. 

Without prejudice rules in a nutshell:

• To have the protection of the without prejudice rules, the correspondence must be a genuine attempt to reach a compromise in a dispute;
• Without prejudice rules apply to oral and written communications;
• There does not need to be litigation in progress, or even a threat of litigation for without prejudice rules to apply. The crucial question is whether, during the course of negotiation, the parties might reasonably have contemplated litigation if they could not agree terms.
• There must be a genuine dispute rather than simply a number of reciprocal differences and grievances.
• The entirety of the without prejudice communications are protected, and the court will not dissect them.

If you want to make an offer to settle a commercial dispute, make sure that you take advantage of the without prejudice protections. 

Our expert lawyers can help you ensure that you protect yourself in the right way. Contact us today to find out how we can help.

Article Credit: Lalla Merlin