When you are involved in a legal dispute, settlement negotiations can be as important as the trial itself. Two key tools in English and Welsh litigation are Calderbank offers and Part 36 offers. Both are designed to encourage settlement and manage legal costs, but they work in different ways. Understanding their strengths and weaknesses can help you choose the right strategy for your case.

What is a Part 36 Offer?

A Part 36 offer is a formal settlement offer made under Part 36 of the Civil Procedure Rules (CPR). It is highly structured and comes with clear cost consequences if it is not accepted and the case proceeds to trial.

  • If a claimant beats their own Part 36 offer at trial, the defendant usually has to pay additional costs, interest, and sometimes even an uplift on damages.
  • If a defendant makes a Part 36 offer and the claimant fails to do better at trial, the claimant may have to pay the defendant’s costs from the end of the “relevant period” (normally 21 days after the offer).

A Part 36 offer provides a means of putting pressure on an opponent to settle a case and, can offer you some protection for your position on costs. If your opponent does not accept a Part 36 offer, they have a significant risk regarding costs and interest if they should fail to do better by going to trial. However, it is important to comply with the requirements for a Part 36 offer, otherwise the offer may not have the consequences set out in Part 36.

Pros

  • Clear, automatic cost consequences provide strong incentive to settle.
  • Widely recognised by judges – predictable effect.
  • Provides certainty for parties making the offer.

Cons

  • Highly technical – strict compliance with CPR 36 is required, otherwise the offer may be invalid.
  • Less flexible in terms of tailoring conditions (e.g. payment terms, confidentiality).
  • If circumstances change, withdrawing or varying the offer can be complex.
  • Part 36 does not apply to small claims

If you are a defendant, you will have to pay the claimant’s reasonable costs within 14 days of the acceptance.  If there is a disagreement regarding costs further costs litigation can follow.

What is a Calderbank Offer?

A Calderbank offer is a settlement offer written “without prejudice save as to costs” (it is sometimes known as a WPSATC offer). This means that, if the offer is not accepted, it cannot be referred to during the course of the legal proceedings relating to the claim itself, but it can be referred to the court on the question of costs. Unlike Part 36, it is not governed by a fixed set of rules. Instead, it gives the court discretion to consider the offer when deciding who pays legal costs.

The idea is similar: if a party makes a sensible settlement offer that is rejected, but the rejecting party fails to do better at trial, the court may penalise them on costs.

Pros

  • Flexible: can include conditions such as staged payments, confidentiality, or non-monetary terms.
  • Allows a defendant to maintain control of the costs position.  In most cases a global offer will be made which includes damages and costs.
  • Can still carry weight on costs, depending on the court’s view.

Cons

  • Less certainty: the court has discretion and may not penalise the rejecting party even if they do worse at trial.
  • No automatic costs consequences, unlike Part 36.
  • Less powerful bargaining tool in mainstream civil litigation compared to Part 36.

Which Should You Use?

  • For most civil and commercial disputes, a properly drafted Part 36 offer is usually stronger, as it gives you clear protection on costs.
  • For cases outside the CPR Part 36 regime, or where flexibility is needed (such as including confidentiality terms), a Calderbank offer may be more appropriate.
  • Sometimes, parties use both tools together, maximising protection while keeping flexibility.

Key Points

Settlement offers are strategic tools, not just numbers on a page. Using the right type of offer can protect you from unnecessary costs and put real pressure on the other side to settle.

Our team at Ellisons regularly advises on both Part 36 and Calderbank offers, ensuring they are drafted correctly and strategically deployed to protect our clients’ interests.

If you are involved in a dispute and want to discuss the best settlement strategy, please contact us for tailored advice.

Contact a member of the Commercial Litigation team for specialist advice.