What

  • A Part 36 Offer is an offer to settle, which is not only used to encourage settlement, but can also be used tactically, to improve and protect a party’s position on costs.
  • The premise behind a part 36 Offer is that a party who has been dragged to trial, having tried to be reasonable, should be compensated. Likewise an unreasonable party, who insists on trial, should be penalised.
  • The rules governing such offers are set out in Part 36 of the Civil Procedure Rules.

How

  • Either party can make the offer at any time, though if made less than 21 days before trial, the automatic costs consequences will not follow and its effects on costs will be at the discretion of the court.
  • A Part 36 offer can even be made before proceedings have begun (known as a pre-action offer).
  • A Part 36 offer is made when served on the offeree.
  • A Part 36 offer can be made in respect of the whole of the claim, part of the claim, counterclaims, appeals and cross-appeals.
  • A Part 36 offer is accepted by serving notice of acceptance on the offeror.
  • If a Part 36 offer is accepted, the claim will be stayed.

Cost consequences

Form

A Part 36 offer must:

  • be in writing;
  • make clear that it is made pursuant to Part 36 of the Civil Procedure Rules;
  • specify a period of no less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted;
  • state whether it relates to the whole or part of the claim, or to an issue that arises in it and if so to which part or issue;
  • state whether it takes into account any counterclaim; and
  • be an offer to pay a single sum of money, not instalments.

Clarifying, amending and withdrawing an offer

  • The offeree may, within 7 days of receiving the offer, request the offeror to clarify the offer.
  • An offeror can withdraw or change the terms of its Part 36 offer if the offeree has not served an offer of acceptance.
  • The offeror can withdraw or amend the offer by serving written notice of withdrawal or change of terms on the offeree.
  • If the offeror amends the offer to make it more advantageous to the offeree, it will be treated as the making of a new Part 36 offer.

Top tips

  • Ensure that your Part 36 offer complies with the format requirements – these are strict.
  • A Part 36 Offer will be considered “without prejudice except as to costs” which means that a Part 36 offer may not be put before the court as evidence before the case has been decided. However, best practice is to head the Part 36 offer “without prejudice save as to costs”.
  • The offer should make it clear whether it includes interest or not – if not addressed, the offer will be treated as inclusive of interest until the date in which the offer expires or 21 days after the date the offer was made.
  • You must formally withdraw your Part 36 offer at the end of the period for which it is stated to remain open, as otherwise it technically remains open.
  • If you are a defendant making an offer, ensure that the offer states that the sum will be paid within 14 days of acceptance; otherwise it will not be treated as a Part 36 Offer if the claimant rejects it.