Calderbank Offers: Legal Strategy for Settlement 

There may be a time when your business falls into a commercial dispute. When this occurs, it is important to resolve your business disagreement as smoothly as possible to avoid unnecessary time and costs. Generally, it is ideal to resolve disputes without litigation, and one way to potentially avoid court proceedings is to present a settlement offer formally. One such formal settlement offer is a Calderbank offer. This article will explain Calderbank offers and how you can use them as a legal strategy for settlement. 

What is a Calderbank Offer? 

The Calderbank offer is named after and came from the significant English court case, Calderbank v Calderbank. A Calderbank offer is where, in a legal dispute, a party makes the other side an offer ‘without prejudice’, except for the costs element. Here, ‘without prejudice’ means that you and the other party cannot mention the offer in court litigation relating to the dispute. Therefore, with a Calderbank offer, if you undertake court proceedings to resolve your commercial dispute, the offer cannot be disclosed when determining who was responsible, also known as liability. However, when the court determines the costs of the case and which party should pay them, the offer can be disclosed. 

How is a Calderbank Offer Useful?

A Calderbank offer is helpful for parties to a commercial dispute. It means that you and the other party can discuss settling your disagreements in confidence, knowing you will not disclose the offer in any related court proceedings. However, as it can be disclosed when the court decides who pays court costs, a Calderbank offer is also a strategic tool. Importantly, you may use the offer to encourage a party to accept a reasonable offer to settle rather than continue to court litigation. This is because if a party refuses it and in court, the judgement is less favourable than the offer, the court may order costs on them. 

A Calderbank offer is very similar to another type of offer called a Part 36 offer. This is because both have cost consequences when refused. However, a Calderbank offer does not have as significant cost consequences as a Part 36 offer, and it can reflect that in making the offer, you had reasonably attempted to settle the dispute. Therefore, you may opt for a Calderbank offer if you wish to avoid unfavourable costs and consequences. This way, you can safeguard your position in terms of costs. A Calderbank offer is also considered more flexible than a Part 36 offer, as it can usually be withdrawn at any point before a court decides on costs.  

If you are considering a Calderbank offer to settle your commercial dispute, you should ensure you seek legal advice from an experienced litigation solicitor. 

What Are the Main Characteristics of a Calderbank Offer?

A Calderbank offer has specific characteristics that distinguish it from other offers to settle a dispute. It will:

• have the particular phrase “without prejudice save as to costs”;
• explicitly mention and follow the principles of the Calderbank case;
• have clear and precise terms;
• be devised as an offer the other party can accept;
• state a reasonable timeframe for the other party to accept or decline the offer if it is a time-limited offer;
• say why the other party should accept the offer; and
• expressly declare that if the other party rejects the offer, it can impact court proceedings regarding their payment of indemnity costs. 

How Do I Accept or Reject a Calderbank Offer? 

Alternatively, you may be on the receiving end of a Calderbank offer. If this occurs during a commercial dispute, you must decide whether to accept or reject it. If you accept it, you can only accept the offer as you have received it, without room for further negotiation. 

On the other hand, you can turn it down by responding to the other party and stating your rejection. However, you must consider the offer carefully and should take legal advice. You will need to consider:

• the expense you will incur in court litigation without settlement;
• the possibility of having to cover the other party’s legal costs in litigation;
• The likelihood of court litigation producing your desired response for the dispute; and
• whether you have justification for considering the offer as unreasonable, as you will have this responsibility in court proceedings.

You can also potentially counter a Calderbank offer, where doing so means that the offer no longer stands. 

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Key Takeaways

If you are in a commercial dispute and are nearing court proceedings, you may wish to consider a Calderbank offer. This may allow you to settle your commercial dispute and avoid litigation. A Calderbank offer is made without prejudice, save as to costs. This means the offer and any discussions about it remain confidential, only being raised when a court needs to decide on costs. Some key things to note when you are sending or receiving a Calderbank offer are:

• their use as a strategic tool to encourage settlement;
• specific characteristics that must be in the offer, such as a reasonable timeframe; and
• the implications of accepting or rejecting the offer. 

If you need help understanding Calderbank offers, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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