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Try to see it my way … using "without prejudice" negotiations to interpret a contract

5 November 2011

The ‘without prejudice’ rule is commonly used to incentivise parties to reach a speedy settlement out of court without fear of making concessions in their own case should the dispute end up in court. If the settlement agreement is not agreed, the court should not even know that it was made.

However the problem comes though when the offer to settle is accepted, court battle averted, only for the parties to later question what its terms really meant.   Should ‘without prejudice’ communications be available to determine what the parties meant when they reached the settlement agreement?

According to the Supreme Court recently they should.

This decision could have the effect of either making parties more wary in their without prejudice negotiations, which would be a shame if it prevented settlement, but it certainly means that settlement agreements, once drafted should be checked carefully against the offers on the table.

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Richard Nicholas

Richard Nicholas

Partner and Responsible for In House Lawyers

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