Part 36 Offer: Settlement with Costs Consequences (2026 Guide)

A Part 36 offer is not an ordinary settlement letter. It is a self-contained code under Civil Procedure Rules Part 36 that carries automatic costs consequences if the other side refuses it and fails to do better at trial. Made correctly, it is the single most powerful strategic document in civil litigation — a legitimate tool that can convert a claim into a settlement, or turn a trial win into an enhanced costs recovery. Made incorrectly, it is simply a without prejudice letter with no teeth.

When Do You Need a Part 36 Offer?

For any party to a civil dispute — claimant or defendant — who wants to impose a costs risk on the other side for refusing a reasonable settlement. A claimant with a strong case flushes the defendant out: offer at 80% of the claim; if defendant refuses and you match or beat at trial, costs consequences are severe and in your favour. A defendant facing an inflated claim protects on costs: offer reflects genuine valuation; if claimant pushes on and recovers less, they pay your costs from end of relevant period onwards.

Part 36 can be used in almost any civil claim governed by the CPR: money claims, contract disputes, property, professional negligence, personal injury, commercial litigation. Made before proceedings issued, any stage during, right up to trial. Not in family, ET, or small claims same formal way.

What It Involves

Part 36 is a self-contained code. Court of Appeal has repeatedly said it stands apart from ordinary offer-and-acceptance contract law principles. Follow Part 36 or fall outside it.

Must comply with CPR 36.5. If not, might function as “without prejudice save as to costs” offer (Calderbank) — court can take into account on costs but will not carry automatic consequences.

Who Can Make One

Either party. Third parties, counterclaiming parties, Part 20 defendants. Key strategic point: claimant offers and defendant offers have different consequences. Defendant’s offer claimant fails to beat: shifts costs to claimant from end of relevant period. Claimant’s offer defendant fails to beat: enhanced consequences — indemnity costs, enhanced interest up to 10% above base, additional amount up to £75,000.

Form Requirements — CPR 36.5

• In writing
• Make clear it is Part 36
• Specify minimum 21-day relevant period
• State whole claim or part (and which part)
• State whether takes counterclaim into account
• State whether inclusive or exclusive of interest

Miss any — not a Part 36 offer. 21 days is a floor, not a default.

Timing

Pre-action: highly strategic, signals confidence. Post-disclosure: considered, well-informed. Pre-trial: final squeeze. Offers less than 21 days before trial: CPR 36.5(4) — offeree gets until end of trial or court-directed lesser period.

Key Deadlines

• Relevant period: minimum 21 days
• Withdrawal within period: only with court’s permission (CPR 36.10)
• Withdrawal after period: written notice — but offer loses Part 36 protection from date of withdrawal
• Acceptance: written notice, stays proceedings on offer terms
• Payment after acceptance: within 14 days unless offer specifies otherwise

Consequences of Acceptance Within Relevant Period

Claim stayed on offer terms. Accepting party entitled to costs up to date of notice of acceptance (CPR 36.13). Payment within 14 days.

Late acceptance: offeree costs up to end of relevant period; offeror costs from end of relevant period to acceptance — unless court considers unjust.

Consequences of Failing to Beat a Defendant’s Offer

Where Part 36 bites. If claimant refuses defendant’s Part 36 offer, goes to trial, fails to obtain judgment more advantageous, court must — unless unjust — order that claimant:

• Pays defendant’s costs from end of relevant period onwards
• Pays interest on those costs

A claimant can “win” and still end up net worse off because they pay defendant’s post-offer costs out of damages. The classic Part 36 trap.

Consequences of Defendant Failing to Beat Claimant’s Offer

Mirror position, stronger. CPR 36.17(4) — unless unjust — court orders:

• Interest on damages up to 10% above base from end of relevant period
• Costs on indemnity basis from end of relevant period
• Interest on those costs up to 10% above base
• Additional amount 10% of first £500,000 + 5% of anything above, max £75,000

Sharpest weapon in civil litigation. Realistic offer beaten at trial = defendant pays indemnity costs with enhanced interest plus bonus.

Strategy

Level

Claimants: realistic, not token. Claim £100k, expect £85k at trial, offer to accept £95k does nothing. Offer £80k puts defendant in jeopardy. Defendants: honest valuation including loss risk. Too low ignored; too high gives away claim.

Timing

Early offers capture more costs on upside, less informed. Later offers better informed, less costs captured. Layer them.

Precision

“In full and final settlement, excluding interest” — or “inclusive of interest” — matters. Counterclaim handling matters. Part-of-claim offers matter.

Common Mistakes

• Not stating it is Part 36
• Relevant period less than 21 days
• Ambiguity about interest
• Ignoring counterclaims
• Withdrawing too early (within relevant period without permission)
• Treating a failed Part 36 as Calderbank — draft it right first time
• Pitching unrealistically — token offer is an own goal

The Rules That Apply

• CPR Part 36 — self-contained code
• CPR 36.5 — formal requirements
• CPR 36.10 — withdrawal and change of terms
• CPR 36.13 — costs consequences of acceptance
• CPR 36.17 — costs consequences following judgment
• Broadhurst v Tan [2016] EWCA Civ 94 — fixed costs and indemnity costs in PI
• Essar Oilfields v Norscot [2016] EWHC 2361 (Comm)
• OMV Petrom v Glencore [2017] EWCA Civ 195 — genuine offer to settle requirement

How Chris Can Help

Short document, technically unforgiving. Single mis-stated clause, missing reference to interest, relevant period 20 days rather than 21 — any strips the offer of automatic consequences.

Chris drafts Part 36 offers to CPR standard: correct declaration, relevant period stated, interest position clear, counterclaim handled, scope defined. Chris does not give legal advice on the figure — your commercial judgment — but drafts the document so it bites.

7-day money-back guarantee. Not happy? We refund. We are miracle-makers, not miracle-workers.

Standalone Part 36 + covering letter: Litigator at £30. Running whole litigation with stack of offers: Hybrid with concierge-level drafting.

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FAQ

Is Part 36 offer same as without prejudice letter?

No. Part 36 is specific rule-based offer with automatic costs consequences. Without prejudice letter is general settlement communication not referred to at trial. Part 36 is special breed of WP save as to costs.

Can I withdraw a Part 36 offer?

Not within relevant period without court permission. After relevant period: written notice, but loses Part 36 protection from date of withdrawal.

Can I make further offers?

Yes. Subsequent offer does not automatically withdraw earlier one. Both assessed at costs stage. Layered offers standard strategic tool.

Pre-action Part 36 offers?

Yes. Fully valid and often very effective. Costs clock starts ticking once proceedings issued.

Does Part 36 apply in small claims?

Technically yes but sting limited as costs generally not recoverable. Fast track and multi-track: fully effective.

What is “more advantageous” at trial?

Money claims: judgment for more than defendant’s offer. Claimant’s offer: judgment at least as advantageous. Court looks at substance, not just headline.

Is Part 36 sealed by court?

No. Served between parties. Court sees only at costs stage after trial. Keep dated copy with proof of service.

Can court refuse standard consequences?

Only if unjust (CPR 36.17(5)). Default is consequences apply; burden on party resisting.

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