Part 36 and offers to settle — overviewClaimant making a Part 36 offer

Part 36 offers are confidential and allow a claimant to either bring proceedings to an end through settlement or to put the defendant in a position where it may incur serious cost and other penalties by not accepting the offer made. A number of requirements need to be met to ensure a valid offer and there are additional requirements in respect of personal injury matters. A monetary offer need not set out how it was calculated but to do so may assist a defendant in deciding whether to accept the offer. It also ensures that the parties are clear as to the basis of the offer being made. Offers can be withdrawn or changed but court permission may be required.

Defendant making a Part 36 offer

Part 36 offers are confidential and allow a defendant to either bring proceedings to an end through settlement or put the claimant in a position where it may incur serious cost and other penalties by not accepting the offer made. A number of requirements need to be met to ensure a valid offer and there are additional requirements in respect of personal injury matters. A monetary offer need not set out it was calculated but to do so may assist a claimant in deciding whether to accept the offer. It also ensures that the parties are clear as to the basis of the offer being made. Offers can be withdrawn or changed but court permission may be required.

Making a valid Part 36 offer

The basic rules for making a valid Part 36 offer are the same whether you are acting for the claimant or the defendant. These basic rules include that the offer must be in writing, state on its face that it is intended to have the consequences of Part 36, state whether it relates to the whole or part only of the claim and provide a minimum 21 day period for acceptance. There are also additional rules regarding when a party can vary or withdraw a Part 36 offer.

Claimant receiving a Part 36 offer

On receipt of an offer it is important to consider not only the terms of the offer but also

• the cost consequences of acceptance and

• the costs and other consequences of rejection where the claimant fails to obtain a judgment more advantageous than the offer

Clarification of an offer may be sought and offers might be capable of acceptance after the deadline provided in the offer. CPR Part 36 sets out the rules on how offers are accepted and in some instances the court's permission will be required.

Counter-offers can be made but they will not affect the validity of the original Part 36 offer.

Defendant receiving a Part 36 offer

On receipt of an offer it is important to consider not only the terms of the offer but also:

• the cost consequences of acceptance and

• the costs and other consequences of rejection should the claimant subsequently obtain a judgment more advantageous than the offer

Clarification of an offer may be sought and offers might be capable of acceptance after the deadline provided in the offer. CPR Part 36 sets out the rules on how offers are accepted and in some instances the court's permission will be required.

Counter-offers can be made but they will not affect the validity of the original Part 36 offer.

Other offers to settle

Settlement offers outside Part 36 can still be made but these will not automatically attract the Part 36 consequences which can incentivise a party to accept an offer. However, there are circumstances where it may be more appropriate to make a 'without prejudice offer save as costs', for example where the offer is to make payments by instalments.

Part 36 offers accepted before proceedings start — costs recovery

Despite the parties being encouraged to settle their disputes as early as possible, there is still some debate as to whether pre-action costs are recoverable when a Part 36 offer is accepted prior to the commencement of proceedings. There is no specific case law on the point but there are cases which provide some insight as to the position that the courts might adopt. In considering these it is also important to consider not only CPR 36 but also CPR 44.12A which deals with the recovery of costs incurred during pre-action where the dispute is settled prior to the commencement of proceedings.