If you are engaged in litigation, you may need to consider making or accepting a Part 36 offer. This is an attempt made by one of the parties to end the dispute by offering a specified sum of money in settlement. It refers to a provision in the Civil Procedure Rules (CPR) which sets out how civil legal cases are to be conducted.
A Part 36 offer needs to comply with the CPR, and the party who receives the offer should also follow the correct procedure in considering it and responding.
What is a Part 36 Offer?
An offer made in accordance with Part 36 of the CPR is a formal offer to settle legal action. It must be a genuine offer, made in writing, and should state whether the sum offered is in respect of all of the claim or part of the claim. If it relates to only part of the claim, it must be made clear which part or parts are included.
An offer of settlement can be made at any point before or during proceedings, and by either party. However, it is only a Part 36 offer if proceedings have been commenced, as this is when the CPR take effect.
If a Part 36 offer is accepted, payment of the agreed sum should be made within 14 days of acceptance. The party making payment will also pay the other side’s legal costs up to the date of acceptance.
Where the amount payable in costs cannot be agreed upon, the court can be asked to assess the bill and make a ruling.
What is Included in a Part 36 Offer?
A Part 36 offer must state that it is made under Part 36 of the CPR and include details of the sum put forward and whether this takes into account any counterclaim. It must give the other party at least 21 days to consider the offer and respond. If no time limit is specified or the time limit has expired, the party making the offer has the option to change or withdraw it. Once the final hearing begins, the court’s permission to settle the case is required.
Why is a Part 36 Offer Made Without Prejudice?
When an offer is made ‘without prejudice’, it means that the court will not be told of the existence of the offer, except after the trial, if there is a separate hearing to deal with the costs of the case. This means that an offer can be made without the risk of it affecting the court’s decision.
When Should You Make a Part 36 Offer?
Your legal team will advise you on the strength of your case, and this can inform your decision as to whether you should make or accept a Part 36 offer.
Making an offer can end litigation and free you up to focus on running your business if it is accepted. It can also be beneficial when it comes to costs.
Offering a sum in settlement early on can prevent a protracted legal battle, which could be both expensive, time-consuming and stressful. There is often a lengthy wait for a final hearing, and you may need to deal with a substantial amount of preparation in collating information and ensuring all of the right documents are provided to your legal team.
The right offer at the right time can be persuasive, and it is often beneficial to both parties to settle an issue without litigation. The details of the matter will not become public knowledge, and it is generally more cost-effective to avoid the court.
Once disclosure has taken place and both sides have a clear picture of the other party’s case, it is common for an offer of settlement to be made. At this stage, you should have an idea of the strength of your position and where to pitch your offer.
If the sum offered is close to what you believe you will achieve at court, it will be risky for the other side to reject it, as they will lose out on costs if the court awards them less than is offered. They will also need to pay interest on the sum owed, which could be substantial.
What Happens if a Part 36 Offer is Not Beaten in Court?
If you make a Part 36 offer and the other side does not receive a higher sum at trial, they will usually be liable for your legal costs, plus interest, from the date of expiry of your Part 36 offer. This means that the earlier the offer was made, the higher the level of costs will be.
However, it is important not to make an offer too early before you have a clear understanding of the strength of your position and that of your opponent.
What to Take into Account When Considering a Part 36 Offer
If you receive a Part 36 offer, your legal team can help you decide whether it is a good offer. You need to consider whether the amount offered is enough to compensate you or whether it feels too low. If you believe you are entitled to more, you need to take into account the cost risk if you were to be awarded less.
There is also a clear benefit to ending legal action, particularly if there is likely to be a long road ahead before a final hearing.
Calculating the reasonable amount should always be done with the assistance of legal experts who have a sound understanding of the likely sum a court will award in the particular circumstances.
Contact Our Commercial Dispute Resolution Solicitors
If you are involved in a commercial dispute, our experienced team members can provide advice and guidance on the best course of action, the result you can expect to achieve and how to handle Part 36 offers.
If you'd like to speak with one of our experienced solicitors in litigation and dispute resolution, please call us on 0330 173 3980, send an email to info@witansolicitors.co.uk, or complete our online contact form. We’ll review your situation and explain how we can help.
