Part 36 offers
A Part 36 offer, as referred to during court proceedings, describes when one party makes an offer to settle the claim to the other party and does so in accordance with Part 36. Part 36 is the section of the civil procedural rules that governs Part 36 offers and sets out the format of a Part 36 offer and its consequences.
Parties to a dispute are encouraged to settle matters at all stages of the dispute and this will usually be done on a ‘without prejudice’ basis. The term without prejudice refers to the fact that the parties are making an attempt to settle and the without-prejudice correspondence cannot therefore (except in limited circumstances) be placed before a court.
The idea of this without-prejudice offer and counter offer, and the fact it will not appear in front of a court, derives from the idea that this will allow the parties to have a better chance of reaching a settlement without the fear that the document will be used against them in court.
When proceedings are issued, a solicitor may advise you to make a Part 36 offer; this is very similar to the without-prejudice rule, but will be ‘without prejudice save as to costs’ meaning that after the trial or judgment has finished the correspondence may be seen by the judge when dealing with the issue of costs. There are, however, strict rules governing the role of Part 36 offers.
Rules governing Part 36 offers
According to Part 36 of the civil procedural rules (the rules that govern civil law cases in the UK) a Part 36 offer must:
- Be in writing
- Specify a period in which the receiving party is to accept the offer (this must be not less than 21 days)
- Specify if the offer relates to the whole of the claim in dispute or merely to part of it, and whether it takes into account any counter claim
- State that it is intended to have the consequences of Part 36.
The consequences of a Part 36 offer
When the defendant makes an offer and it is accepted by the claimant within the period of time given for acceptance, the claimant is entitled to claim his legal costs back from the defendant up until the date at which he accepted the offer. It is therefore extremely important that a solicitor advises you about this because otherwise you will be left liable to pay a lot more than you had expected. A solicitor will, of course, usually ask the claimant’s solicitors for their costs to date and inform their client before advising on accepting or making a Part 36 offer.
However, if the claimant rejects the offer and subsequently at trial the claimant receives a judgment for less than the amount the defendant was offering, he will have to pay the defendant’s costs (including interest) from the point at which the period for accepting the original offer expired until judgment.
Part 36 offers are extremely important as they ensure, through their cost-penalty consequences, that both sides take negotiation seriously and do not simply reject all offers in order to get to a trial.
Making a Part 36 offer is therefore a tactical decision for both the solicitor and client, as is accepting or rejecting an offer. Part 36 offers certainly succeed in ensuring both sides know the merits of their case and keep an eye on settlement at all times.