ABSTRACT
This chapter explains some legal issues that the party needs to be aware of when he starts work on trying to negotiate a settlement. Settlement meetings are frequently expressed to be 'without prejudice' and letters of offer are often marked 'without prejudice'. The chapter considers the terminology of negotiation – 'without prejudice', 'subject to contract', 'heads of agreement', 'letters of intent'. It explores what is the legal consequence of offering a cheque 'in full and final settlement'. The chapter discusses the essential requirements of a valid compromise. It talks about the effect of the civil justice reforms (the Woolf reforms) on the party' negotiations. The party should consider how the 'pre-action' conduct will be viewed by the court if the negotiations break down and the matter goes to court. The terms agreed upon should be workable and favourable.
