In communication between parties in legal matters, the phrase without prejudice is often included. I've also seen it used in the phrase without prejudice, save as to costs.
What is the purpose and legal effect of this?
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Do you have an example with a bit more context? Like, what it says is without prejudice, or what sorts of communication you're talking about? – cpast Aug 2 '15 at 17:00
Without prejudice in a legal communication has a similar effect as off the record does in journalism. Without prejudice can be applied to any form of communication written or verbal; mediations, for example, are almost always conducted on a without prejudice basis.
The legal effect is that anything said or written in the communication is inadmissible in a court. A typical example is in a settlement offer: "We have your claim for $1,000,000 and we think its a load of c**p for reasons A, B & C, however, without prejudice we offer the amount of $3.50 as full and final settlement of your claim. This offer remains open for 7 days." The party that receives such a letter can not use or rely on anything it says in legal proceedings.
It is a practical and invaluable method of allowing real negotiation and concessions to be made without the risk that these will be used against you if it all falls in a heap and you end up in court.
Without prejudice, save as to costs has the same effect with the addition that you are specifically making a settlement offer (like my example above). If a matter is resolved by a trial the judge will award costs either against each one party or order that each party pays their own costs; in general, the costs "follow the event" i.e. the losing party usually gets stuck with the costs. If the "losing" party can show that they made a reasonable offer of settlement then they can apply to have the "winning" party pay their costs from that point on. For example see NSW Costs.
Now, a document either is or is not without prejudice irrespective of if it carries the words or not - you can’t make a document that is not part or a bona fide negotiation without prejudice just by writing the words on it and one that is part of a negotiation is without prejudice even if it omits the words.
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I think it would be more accurate to say that "without prejudice" means the speaker doesn't want the matter to be admissible. Settlement discussions are inadmissible by rule in most common law jurisdictions, whether you say "without prejudice" or not. The phrase is intended to put someone on notice that you intend the communication as a privileged settlement offer--but if what follows isn't part of a bona fide settlement discussion, it won't necessarily be privileged. – chapka Aug 4 '15 at 1:30
It means with out liability, or implying said, can not be used in court
The term is used to indicate that the correspondence is part of a settlement negotiation rather than just a letter about any other part of the case.
The reason for that is that settlement negotiations are supposed to be kept private, as the other answers have said.
The phrase is just meant to tip you off that the correspondence actually is a settlement negotiation to avoid confusion.
