What does “Without Prejudice” mean?

I'm not trying to be a "cool grandad", really I'm not

If you have ever had to sue someone else and gone through the courts or Employment Tribunal, or if you have been asked to sign a compromise agreement upon the termination of your employment, it’s pretty likely that at some point the words “without prejudice” will have cropped up, followed (perhaps) by “subject to contract”.  They can be baffling and many clients ask me what “without prejudice” means when I’m taking them through a compromise agreement.  One client once asked me to write a letter to the other side “with prejudice”.  Many people, lawyers and non-lawyers alike, write the words “without prejudice” on all their correspondence in the hope (presumably) that they will act as some kind of Harry Potteresque invisibility cloak to stop their words being thrown back at them in court.  It doesn’t always work.

What does it mean?

Basically it’s a mechanism that allows one party in a dispute to put an offer of settlement to the opponent without risk that that offer will be used in court against them as evidence that they were liable for the dispute all along. It only applies provided that the offer is a genuine attempt to settle a dispute of a legal nature or litigation.  The words “without prejudice” act as a shield to allow “behind the scenes” negotiating and is a form of what lawyers call “privilege” (meaning privileged from publication).

It’s a doctrine that’s as old as the hills, but crops up in the law reports fairly regularly as one party or another to a dispute tries to widen or narrow the scope of the rule.  The recent case of Woodward v Santander [2010] UKEAT 0250_09_2505 was a case in point and provided a reminder that it won’t protect all communications hiding behind it.  Without Prejudice won’t cover up acts of “unambiguous impropriety”, which would include acts of blackmail or perjury and Woodward confirms that is still good law, albeit the “unambiguous impropriety” has to be pretty clear cut.  Woodward was a case based on discrimination and Mrs Woodward had sought to argue that the unambiguous impropriety exception should cover discrimination.  The EAT rejected that.

“Subject to Contract” is a similar type of provision, most often cropping up in property or other transactions, to ensure that neither party will be bound by the terms of the draft contract until it has been signed by all the parties and is only then legally binding.

Here endeth the lesson …

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