What does ‘Without Prejudice’ mean?

May 21, 2017 | Business Contracts, Commercial Contracts

Without Prejudice

If you have had anything to do with lawyers I bet you've heard the term 'without prejudice'. It's one of those terms you think you know the meaning of but 'what does without prejudice mean?'

What Does ‘Without Prejudice’ Mean?

The term simply means that whatever you are saying in your letter or email cannot be used against you in court/legal proceedings.  It is a privilege that is enshrined in legislation in Australia (the Evidence Act).

Parties to a dispute are allowed to settle at any stage of proceedings, i.e. before the case goes to court or even after it has been going in court for some time.

So where one party makes an offer, or offers, to the other party, but they don’t want those offers to be later used against them in any legal proceedings, then the party will label those documents, letters, emails, (or even state in a phone call) that the correspondence is ‘without prejudice’ and therefore that correspondence is cloaked with privileges.

If negotiations or out of court settlements fail, those communications and documents cannot be used against one party by the other party.

The term covers all communication channels, written, oral, audio, video, and even texting.. if that was how you were going to make an offer to settle a case!

Why do people use 'Without Prejudice' on letters or emails?

As indicated above lawyers will insert ‘Without Prejudice’ on communications to protect the communications and negotiations between them and a party with which they have a pending dispute.

Given this protection, a party making an offer is more likely to be open (well ‘more open’ than they otherwise may be) in their communications with the other party and they will be free to make suggestions, concessions or compromises without having to worry about it coming back to bite them in the future if they end up in court (or if the matter is already in court then they don’t need to worry about the offers being used against them).

When does 'Without Prejudice' apply?

Marking correspondence with ‘Without Prejudice’ will only be valid (as determined by a court) where parties are in the process of genuine settlement negotiations and are attempting to settle legal proceedings/dispute resolution process.

I have forgotten to state 'Without Prejudice' on my letters... is that a problem?

If you have forgotten to insert ‘Without Prejudice’ on your communications, don’t worry as the protection will most likely still apply (the Court will make a determination about whether the privilege still applies based on whether the correspondence is trying to settle a dispute).

Should I use ‘Without Prejudice’ on my letters or emails?

If there is a genuine (i.e. a real, not artificial) dispute between you and another party, and the letter or email you are going to send is to try and settle that dispute (by making an offer or a compromise) then ‘Yes’ label it Without Prejudice (otherwise save yourself the extra typing).

You DO NOT need to use ‘Without Prejudice’ in the following circumstances:

  • general communications between parties not relating to a dispute – this includes negotiations
  • a letter concluding a transaction
  • a letter agreeing to an offer
  • general commercial communications – including commercial negotiations
  • a letter of demand for amount owed. However if the amount owed is in dispute, it can be marked 'without prejudice'.

We hope that’s clear. Still in need of in depth explanations? Call us on 1800 355 455 today to schedule a consultation.

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