What exactly does “without prejudice” mean?

In legal writing, the phrase “without prejudice” is often used. It serves to provide a safe environment for parties to communicate freely in the hopes of a genuine attempt to settle the dispute without worrying that what they say or write will be used against them in court.

It prevents actual settlement discussions, whether verbal or written, from being presented to the court.

Allowing parties to lay their cards on the table without worrying about consequences is an obvious public policy benefit.

To other people, however, the phrase “without prejudice” evokes a mystical spell that, if it is written or spoken, will prevent any form of communication from ever being examined by a court. Some people use it on every piece of mail they send in an effort to give it that protection.

Is that actually the case, though? If not, what are the restrictions?

Sheriff Reid provided a helpful summary of the present law of without prejudice in the recent case of Lujo Properties Ltd V Gruve Ltd [2023].

Exceptions to the “without prejudice” rule

• Only real settlement or litigation-avoidance negotiations can be protected by it.
• Without prejudice correspondence can be used to demonstrate the existence of a contract when a trade has been completed.
• The without prejudice conversations can be used to show that a bargain was made dishonestly in cases where it was.
• It might be applied in private bar disputes. As an instance, the without prejudice correspondence can be examined if the other party later asserts that you shouldn’t have acted the way you did as a result of something the other side said in the correspondence that was meant to influence you.
• Evidence of the negotiations can be used to show that there was a long delay or seeming consent to a certain act because without prejudice negotiations were ongoing.
• One may rely on evidence of an offer that has been clearly stated to be without prejudice aside from costs.
• Perhaps most significantly, Scottish courts have a distinct tendency to create an exception to the rule of without prejudice in cases where “clear admissions or statements of fact which, although contained in the same communication, did not form part of the offer to compromise…” Dilapidations talks may suffer as a result, which might be very serious.

Anyone trying to protect their communication should be careful to understand these limitations because using without prejudice is not always the panacea that is believed to be.

Get in touch with our dispute resolution team

You can get in touch with our SGT Law Firm dispute resolution solicitors if you have any additional enquiries or would like more information about without prejudice letters.