You can reach an agreement/resolve the dispute with the defendant either before or after you begin court proceedings. 

The court expects you to have tried to reach an agreement before you start your case. In fact, you must follow a particular procedure to do so. We explain these rules and what you have to do to follow them in our guide Pre-action protocols – What you need to know before starting a claim.

Once the case has started, you can try to settle the claim at any time. This can be done through: 

• informal discussions - either face-to-face, or by phone or video call, or
  making a proposal in writing, or
• by attending mediation, or another form of alternative dispute resolution, or
  a combination of all of these things.

All written communications and discussions about settlement should be marked “without prejudice” or “without prejudice save as to costs”. 

This means that they are confidential. If you do end up going to trial, the general rule is that "without prejudice" communications will not be shown to the court and cannot form part of the other side’s case and be used against you. 

If you are making an offer to settle, it should always be marked “without prejudice save as to costs”. This means that it will not be shown to the court during the trial, but may be shown to the judge at the end of the case when the court is being asked to consider who pays the costs. It can be useful at that stage to show the judge any “without prejudice save as to costs” communications to show that you have been acting reasonably. 

The court rules also offer a formal way of trying to settle your claim. These rules encourage the other side to accept a reasonable offer by providing financial incentives to do so. They are known as a ‘Part 36 offer to settle’, named after the court rule describing the procedure - Part 36 of the Civil Procedure Rules (or CPR).

Who can make a Part 36 offer and when?

A Part 36 offer to settle can be made:

• By the claimant or the defendant. If you are the claimant, you can make a Part 36 offer, but you may also need to deal with a Part 36 offer made by the defendant. For either, you will have to carefully and realistically value your case.
• In fast track, intermediate and multi-track claims only. You cannot use the Part 36 process in small claims. (In small claims, both sides can make offers to settle, and have “without prejudice” or “without prejudice save as to costs” communications, but the formal rules in Part 36 do not apply.)
• Before or after the start of court proceedings, right up to near trial (special rules apply close to trial).

Part 36 offers can be an incentive to settle because they can affect the amount of legal costs that one side has to pay the other side. They also offer a tactical advantage in forcing the other side to pause and think very hard about the strengths, weaknesses and value of their case. 

Whether you decide to make or accept a Part 36 offer depends on:

• which side makes the offer,
• whether or not the offer is accepted,
• if it is accepted, whether this is within or after expiry of the relevant period (see below),
• if it is not accepted, what happens at the trial. 

If you turn down a Part 36 offer, but don’t get a better result from the judge at the trial than the original offer, you will have to pay all the other side’s legal costs from the end of what is known as the ‘relevant period’. 

This ‘relevant period’ is the time you are given to consider (and accept) the offer by the offeror. It is usually 21 days from when the offer was made, and the exact number of days given has to be set out in the offer.

It’s more common to receive a Part 36 offer if the defendant has a solicitor.

You must take any Part 36 offer that you receive very seriously. Think carefully about what your claim is worth and how good your case is, and if you are prepared to accept the offer, given that it would remove the risk (and hassle and expense) of going to trial.

It is often very difficult to assess whether an offer is good or reasonable (and a defendant isn’t obliged to explain how they came to the amount). If you can, get some legal advice to help you decide.

You will usually only get the relevant period of 21 days to accept. Most reasonable defendants will extend that time for a few days if you have a good reason, but you will need to ask – don’t just ignore the deadline! Needing a short period of extra time to consider the offer with a solicitor’s advice would be a reasonable reason to ask for an extension to the relevant period.

A Part 36 offer can be accepted after the relevant period, unless it has been withdrawn. However, if you accept it after the relevant period, you will have to pay the other side’s legal costs from the end of the relevant period to the date you accepted the offer.

One big factor in many cases is that if the defendant says you are partly at fault, and the judge agrees, you are at risk of losing a proportion of the value of your claim. For example, if you are found to be one third to blame, you will lose one third of the value of your claim. This is often known as 'contributory fault' or 'contributory negligence'.

You need to tell the offeror that you accept the offer in writing, and also send confirmation to the court. 

It is possible to accept the offer by writing a letter. However, as there are specific rules on accepting an offer and the information to include, the easiest thing is to use the ‘notice of acceptance’ form at the end of the N242A form. 

How long do I have to accept or refuse a Part 36 offer to settle?

As long as it has not been withdrawn, you can accept an offer at any time. However, if you accept it within the relevant period (which is at least 21 days but may be more depending on what it says in the Notice of Offer to Settle), you will have to pay the other side’s legal costs. If you accept it after the relevant period, you have to pay the other side’s legal costs from the end of the relevant period to the date you accepted it.  

Either side can make a Part 36 offer to encourage the other side to agree to a settlement. The impact on who has to pay legal costs depends on whether or not the other side accepts and, if so, when. 

Where the claimant has made the offer and the defendant accepts, the defendant will very likely have to pay the claimant’s costs from the beginning of the claim to the date they accepted the offer. 

If the defendant does not accept the offer, the case goes to trial, and the claimant is awarded an amount equal to or higher than the offer, the court will order the defendant to pay the claimant's costs from the beginning of the case to the trial. The court will also order (unless it is unjust to do so):

• interest on the damages awarded,
• interest on the costs (or an uplift of 35% to costs where the Fixed costs regime applies),
• an additional sum, calculated as a percentage of the amount awarded by the court, up to a maximum of £75,000.

You can make a Part 36 offer to settle using the notice in Form N242A

You can accept an offer using the notice of acceptance at the back of Form N242A

Relevant Rule: Part 36 - Offers to settle

Additional rules: Practice direction 36 Offers to settle

Even if you have been unable to settle the dispute, the court expects you to show you have co-operated with the other side in trying to establish what it is you don’t agree on, and in providing each other with information. 

If the attempt to settle (either an informal offer or a formal Part 36 offer) has been unsuccessful, the judge doesn’t get to know what has been offered and rejected until after the trial. This means that their judgment will not be affected by the value of the offer. It only becomes relevant after trial when the judge decides what to do about legal costs. 

Make sure you have followed the relevant pre-action protocols and court rules.

Civil procedure rules 

The court rules that you have to follow when you take someone to court.

Costs on an indemnity basis, or indemnity costs

Although this is not the norm, the judge can order that costs are assessed on an indemnity basis. This means that if there is a dispute about whether the costs were unreasonably high or unnecessary, the court is likely to decide in favour of the person who made the offer, and not the side that rejected the offer. This is likely to result in a higher overall costs bill than if costs are assessed on the standard basis.

Costs on a standard basis, or standard costs 

The usual rule is that the successful party is entitled to their costs on the standard basis. This means that if there is any doubt about whether the costs were unreasonably high or unnecessary, the court is likely to decide in favour of the side that  has to pay.

Pre-action conduct 

The name of the process the court expects you to follow before you start your claim if there isn’t a pre-action protocol that applies to your case. This refers to the way you behave and the steps you must take. See our guide to pre-action conduct and protocol.

Pre-action protocol

The name of the process the court expects you to follow before you start your claim. There are specific pre-action protocols for many types of case. See our guide to pre-action protocols.

Relevant period

This is the period (usually 21 days from when a Part 36 offer was made) during which the offeree can accept the Part 36 offer and take advantage of the more favourable costs consequences. The relevant period has to be set out in the offer and cannot be less than 21 days.

Without prejudice

If you do end up going to court, neither side will be allowed to tell the judge about any communications with “without prejudice” written on them. So, anything said in these communications can be said openly and safely in the knowledge that it cannot form part of the other side’s case.

Without prejudice save as to costs

Any communications labelled “without prejudice save as to costs” cannot be shown to the judge until after the trial, when they are deciding on the amount of costs the losing side has to pay.

Disclaimer

The information in this guide applies to England and Wales only. The law may be different if you live in Scotland or Northern Ireland. 

The law is complicated. We have simplified things in this guide. Please don’t rely on this guide as a complete statement of the law. We recommend you try and get advice from the sources we have suggested.

The cases we refer to are not always real but show a typical situation. We have included them to help you think about how to deal with your own situation.

Acknowledgements

This guide was produced and updated by Advicenow with additional material from Laura Bee. 

We would like to thank everybody who commented on the updated guide and editorial teams at Thomson Reuters who kindly peer reviewed this updated version.

This version was updated thanks to funding from the Ministry of Justice, via the Online Support and Advice Grant.