All businesses dread being embroiled in a dispute. It takes away time and resources from more pertinent business activities to grow and strengthen the business. Business disputes are very much a part of a business. Employing strategies and ensuring a budget to deal with disputes is important. To reduce costs, a business may choose to negotiate a resolution before the matter gets escalated to lawyers and to the Courts.
While this is encouraged, here is a timely reminder. When sending out an offer, it is very important to include the words “without prejudice”. The words Without Prejudice potentially evokes a legal protection to enable parties to put forward potential genuine offers, without the fear of compromising their legal entitlements and rights. While there is no automatic right for such correspondence to be excluded in a court proceeding afterwards, the words Without Prejudice does add weight to the fact that the contents of such a document involved negotiations. Ultimately, there must have been a genuine attempt to negotiate a settlement of a dispute.
For example, Business A is owed $70,000 by Business B, and after much consideration, is willing to settle the matter with Business B for $55,000, this offer can be sent in an email with the words Without Prejudice prefacing the email. This way, if Business B does not accept the offer, Business A has not compromised it’s position to claim the full $70,000 afterwards. Ultimately, this must be a genuine attempt to resolve the dispute, even if the offer is of $0 for all parties to walk away from the dispute.
Pre-litigation correspondence is often ripe with inadvertent potential admissions and waived rights as it is at this stage that lawyers are not yet involved. It is important to seek legal advice in a timely manner, ideally at the outset of the dispute.
Senior Associate (Admitted in Australia, Singapore and England & Wales)