“Without prejudice” is a term used in legal negotiations to help parties reach a settlement without actually going to court. The use of the words mean that you can say things in negotiations that aren’t admissible in court and are not going to diminishing the strength of your case so long as they are genuine negotiations aimed at settlement.
When and how to use it?
You can use “without prejudice” on both written or oral communications but it must be clearly stated before the content of the letter or discussion begins. Correspondence can be made on a “without prejudice” basis when:
- Making an offer of settlement
- Negotiating the terms of a contract
- Making a counteroffer
During court proceedings, this type of “without prejudice” material cannot be used unless:
- Both parties’ consent
- It falls under a legal exemption
- Upon the order of the Judge
When does “without prejudice” not apply?
You may find that some lawyers overuse the term by writing it on every single piece of correspondence even though the primary intent of the communication is not to settle the dispute. Confidentiality and privilege may not always apply to all of these pieces of communication if that is not their intent, so in some cases those certain communications can later be used as evidence. Unless it is made in an effort to settle a dispute, a communication will not be protected by having the words “without prejudice” used.
There are also some other instances when “without prejudice” does not apply such as when:
- substance of the communication or document has been already been disclosed with the consent of all the parties
- communication or document includes a statement to the effect that it was not to be treated as confidential
- evidence before the court is likely to be misleading unless evidence of the communication or document is allowed to qualify or contradict the current evidence
- communication or document is relevant to determining a party’s liability for costs
- communication was made, or the document was prepared, as part of the committal or furtherance of a fraud.
Understanding the fundamentals of how the “without prejudice” rule is of real practical and commercial value to any business. On the contrary, using it incorrectly carries significant risks and can seriously damage in subsequent litigation.