Part 36 Offers Explained: Settlement Strategy in Civil Litigation | eLitigant

What Is a Part 36 Offer?

A Part 36 offer is a formal settlement proposal governed by CPR Part 36. It carries specific costs consequences that make it one of the most strategically significant tools in civil litigation in England and Wales.

Unlike an informal “without prejudice” offer, a Part 36 offer follows prescribed rules about its form, timing, and effect. If the receiving party fails to accept a Part 36 offer and then fails to obtain a better result at trial, the court will impose costs penalties. These penalties can be severe — and they apply regardless of which party made the offer.

Understanding how Part 36 offers work is essential for anyone involved in civil litigation, whether bringing or defending a claim.

How Part 36 Works

The mechanism is straightforward in principle:

1. One party makes a written offer that complies with CPR Part 36
2. The offer remains open for at least 21 days (the “relevant period”)
3. The receiving party decides whether to accept or reject the offer
4. If accepted — the case settles on the offered terms, with costs consequences that favour the accepting party
5. If rejected — the case proceeds to trial. After judgment, the court compares the result with the Part 36 offer

The power of a Part 36 offer lies in step 5. If the party who rejected the offer fails to beat it at trial, the costs consequences shift dramatically.

Making a Valid Part 36 Offer

A Part 36 offer must comply with specific requirements to be valid (CPR 36.5). It must:

• Be in writing
• Make clear that it is made pursuant to Part 36
• Specify a relevant period of not 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 claim or part of it (and if part, which part)
• State whether it takes into account any counterclaim

Requirement	Detail
Format	Written, headed “Part 36 Offer” or stating it is made under CPR Part 36
Relevant period	Minimum 21 days (can be longer)
Scope	Must state whether it covers the whole claim or specific parts
Counterclaim	Must state whether the offer accounts for any counterclaim
Amount	If a money claim, must specify the sum offered
Costs	Must not include conditions as to costs (costs consequences are determined by the rules)

An offer that does not comply with these requirements may still have effect as a Calderbank offer (an offer made “without prejudice save as to costs”), but it will not carry the automatic costs consequences of Part 36.

Costs Consequences

The costs consequences of Part 36 are what give the mechanism its strategic force. They differ depending on whether the offeror is the claimant or the defendant.

If the Claimant Rejects the Defendant’s Part 36 Offer

If the claimant rejects the defendant’s offer and then fails to obtain a judgment more advantageous than the offer, the court will (unless it considers it unjust) order that:

• The defendant’s costs from the date on which the relevant period expired are paid by the claimant
• The claimant receives their own costs only up to the end of the relevant period

In practical terms, the claimant pays both sides’ costs from the point the offer should have been accepted. In a fast track or multi-track case, this can amount to thousands of pounds.

If the Defendant Rejects the Claimant’s Part 36 Offer

If the defendant rejects the claimant’s offer and then the claimant obtains a judgment at least as advantageous as the offer, the court will (unless it considers it unjust) order (CPR 36.17(4)):

• Interest on the whole or part of the award at a rate not exceeding 10% above base rate, for some or all of the period from expiry of the relevant period
• Indemnity costs from the expiry of the relevant period (assessed on the more generous indemnity basis rather than the standard basis)
• Interest on those costs at a rate not exceeding 10% above base rate
• An additional amount of up to £75,000 (calculated as a percentage of the damages awarded)

These enhanced consequences are designed to penalise a defendant who forced the claimant to trial unnecessarily. They are among the most punitive costs provisions in the Civil Procedure Rules.

When to Make a Part 36 Offer

Timing is critical. Consider making a Part 36 offer at the following stages:

As a Claimant

• Early in proceedings — shortly after the defence is filed and the issues become clear. An early offer demonstrates a willingness to settle and starts the costs clock
• After disclosure — once you have seen the defendant’s documents and can assess the strength of your case more accurately
• Before trial — a final offer before trial concentrates the defendant’s mind on the costs risk of proceeding

As a Defendant

• With or shortly after the defence — an early offer shows good faith and creates costs pressure from the outset
• After case management — once the track allocation and trial costs are known, a realistic offer becomes more compelling
• Before the hearing fee is due — the hearing fee (see our court fees guide) is a tangible cost that focuses minds on settlement

Multiple Offers

There is no limit on the number of Part 36 offers a party can make. It is common practice to make successive offers as the case develops, adjusting the amount as more information becomes available. Each offer carries its own relevant period and its own costs consequences.

Accepting a Part 36 Offer

A Part 36 offer is accepted by serving written notice of acceptance on the offeror (CPR 36.11). If accepted within the relevant period, the consequences are straightforward:

Party Accepting	Costs Position
Claimant accepts defendant’s offer	Defendant pays claimant’s costs up to the date of acceptance (standard basis)
Defendant accepts claimant’s offer	Defendant pays claimant’s costs up to the date of acceptance (standard basis)

If a Part 36 offer is accepted after the relevant period has expired, the costs position is different. The court will decide the costs liability unless the parties agree. Late acceptance is still possible, but the costs protection is less certain.

Can You Accept After the Relevant Period?

Yes. A Part 36 offer does not expire when the relevant period ends (unless it has been formally withdrawn). The offer remains open for acceptance — but late acceptance means the automatic costs provisions no longer apply, and the court has discretion on costs.

Withdrawing or Changing a Part 36 Offer

A Part 36 offer can be withdrawn or its terms changed at any time by serving written notice (CPR 36.9 and 36.10). However:

• Withdrawal before the relevant period expires requires the court’s permission if the offeree has not yet served notice of acceptance
• Changing the terms — for example, reducing the amount offered — is treated as a withdrawal of the original offer and the making of a new one
• The original offer’s costs consequences may still apply up to the point of withdrawal

Part 36 and Small Claims

Part 36 offers can be made in small claims track cases. However, because costs recovery on the small claims track is severely restricted (generally limited to court fees, witness expenses, and limited expert fees), the costs consequences of Part 36 have less practical impact.

That said, a well-timed Part 36 offer on the small claims track still demonstrates reasonableness and may influence the court’s approach to any costs award it does make.

Strategic Considerations

For Claimants

• Make your Part 36 offer slightly below your best assessment of what the court would award. The goal is to create a realistic prospect that the defendant will fail to beat it at trial
• Do not pitch too low — if the court awards more than your offer, the enhanced consequences apply, but an unrealistically low offer signals weakness
• Keep records of the offer, the method of service, and the date served

For Defendants

• A well-judged Part 36 offer is the most effective costs management tool available. If you believe liability is likely, an early realistic offer limits your costs exposure
• Paying the right amount into the offer is key. Too low and the claimant will ignore it. The right amount creates genuine pressure to settle
• Consider the total cost of proceeding to trial — court fees, hearing fees, preparation time, and the risk of indemnity costs — against the cost of settling

The Judgment Comparison

At trial, the court compares the judgment with the Part 36 offer. For money claims, this is a simple numerical comparison. For non-monetary claims, the court assesses whether the judgment is “at least as advantageous” as the offer — a test that requires a broader evaluation.

Part 36 Offers and Mediation

A Part 36 offer does not replace mediation, and mediation does not replace Part 36. They serve different functions:

• Part 36 creates a costs incentive to settle by imposing penalties for unreasonable rejection
• Mediation provides a facilitated process for reaching agreement on terms that may go beyond what the court can order

Many cases benefit from both. A Part 36 offer made before mediation demonstrates willingness to settle and provides a fallback if mediation does not succeed. If mediation produces a settlement, the Part 36 offer can be withdrawn.

Preparing Your Part 36 Offer

The eLitigant service can help you draft a Part 36 offer that complies with CPR requirements, is pitched at the right level for your case, and is served correctly. A valid Part 36 offer is a precision instrument — getting the wording, timing, and amount right can determine the financial outcome of your entire case.

Complex case? If your matter involves multiple documents, enforcement across courts, or multi-track allocation, see our Hybrid Assisted Drafting plan — 1,000 pages of barrister-grade drafting for £1,000.

Frequently Asked Questions

Can a litigant in person make a Part 36 offer? Yes. There is no requirement for legal representation to make a Part 36 offer. The offer must comply with CPR Part 36 requirements — it must be in writing, state that it is made pursuant to Part 36, specify a relevant period of at least 21 days, and state the terms clearly. Any party to civil proceedings can make one.

What is the difference between a Part 36 offer and a without prejudice offer? A Part 36 offer carries automatic costs consequences defined by the Civil Procedure Rules. A without prejudice offer (sometimes called a Calderbank offer when marked “without prejudice save as to costs”) does not carry these automatic consequences — the court has discretion on costs. Part 36 offers must also meet specific formal requirements that without prejudice offers do not.

Can I make a Part 36 offer before issuing proceedings? Yes. CPR 36.7(2) permits Part 36 offers to be made before proceedings are commenced. The offer must still comply with all the formal requirements. If proceedings are subsequently issued and the offer is not beaten at trial, the same costs consequences apply.

What does “more advantageous” mean? For money claims, “more advantageous” means the judgment amount exceeds the Part 36 offer (for claimant’s offers) or is less than the offer (for defendant’s offers). For non-money claims, the court considers whether the judgment, taken as a whole, is at least as advantageous as the proposals contained in the offer. The court has discretion in making this assessment.

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Next in the series: Preparing for the Hearing: What to Expect on the Day — a practical guide to attending court and presenting your case.

This is Part 11 of 21 in the eLitigant Court Guide series. Visit our blog for the complete collection.

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