A reservation made on a statement or offer that it is not an admission or cannot otherwise be used against the issuing party in future dealings or litigation with any determinative legal effect.
A statement set onto a written document such as a letter, which qualifies the signatory as exempt from the content to the extent that it may be interpreted as containing admissions or other interpretations which could later be used against him or her; or as otherwise affecting any legal rights of the principal of, or the person signing.
In Castano v Gabriel, a 1969 residential tenancy case, Justice Wahl of the Civil Court of New York City wrote:
"When a dispute arises between parties and they desire to preserve their respective rights and positions, then such reservation is readily accomplished by the performance of the acts between the parties where such is done without prejudice as to the existing controversy. Thus, no determinative legal effect is completed; it is reserved for future determination."
In an 1882 decision, Re Leite, Justice Fry wrote:
"The words without prejudice when added to letters, only mean that in the event of the negotiations carried on by those letters not resulting in any agreement, nothing in them is to be taken as an admission. Where letters written without prejudice contained an undertaking on certain terms which were agreed to by the other side, and afterwards the parties giving the undertaking wished to introduce a fresh condition, the original undertaking was enforced."
In Cross & Tapper on Evidence, the authors wrote:
"As part of an attempt to settle a dispute, the parties frequently make statements without prejudice. When this is done, the contents of the statement cannot be put in evidence without the consent of both parties.... The statements often relate to the offer of a compromise and, were it not for the privilege, they would constitute significant items of evidence on the ground that they were admissions. Obviously, it is in the public interest that disputes should be settled and litigation reduced to a minimum so the policy of the law has been in favour of enlarging the cloak under which negotiations may be concluded without prejudice."
In Halsbury's Laws of England:
"Letters written and oral communications made during a dispute between parties which are written or made for the purpose of settling the dispute, and which are expressed or otherwise proved to have been made without prejudice cannot generally be admitted in evidence. The rule does not apply to communications which have a purpose other than settlement of the dispute."
Solicitor David Burrows wrote:
"The without prejudice privilege rule enables a party to proceedings to claim privilege from disclosure to the court of documents covered by the privilege. The privilege rests first, upon the express or implied agreement of the parties themselves that communications in the course of the negotiations should not be admissible in evidence. Second, it derives from a public policy that rests upon the desirability of preventing statements or offers made in the course of negotiations being brought before the court on trial as admissions of liability."
An attorney or a lawyer will often send a letter without prejudice in case the letter makes admissions which could later prove inconvenient to the client.
When without prejudice is contained within an order of the court, especially dismissal orders, the import is to avoid the application of res judicata against whatever has been thus reserved. Thus, in Sager, Illinois judge Getzendanner wrote:
"A dismissal without prejudice means only that the Court has not adjudicated the merits of the claim so that dismissal cannot have any res judicata effects in a later action."
The privilege of adding without prejudice to lawyer letters has been thoroughly over-used.
Without prejudice has become a customary addition to all attorney letters, almost as if it were a professional trade-mark, and designed more to intimidate than to settle or negotiate.
In some cases, attorneys stick a without prejudice on every letter they write, more times than not simply to add sting, as a badge of temerity or brashness, so much so that you will routinely see it stamped or printed on letters clearly intended to be with prejudice, such as a letter which purports to confirm a settlement.
If a letter is written without prejudice, the rule of thumb is that it is privileged and cannot be used in Court as evidence. However, in some jurisdictions, there has been so much abuse of this caution that no such privilege is extended to any letter marked without prejudice unless in fact the letter actually advances a settlement or otherwise is part of some such negotiation towards settling.
In Unilever, Justice Walker, law judge, suggested that the without prejudice privilege could be lifted in a document submitted in evidence at trial in the following circumstances:
"...there are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. The following are among the most important instances:
- (W)hen the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible....
- Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence....
- Even if there is no concluded compromise, a clear statement which is made by one party to negotiations, and on which the other party is intended to act and does in fact act, may be admissible as giving rise to an estoppel....
- Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety.... (T)he exception should be applied only in the clearest cases of abuse of a privileged occasion.
- Evidence of negotiations may be given... (but) ... limited to the fact that such letters have been written and the dates at which they were written". But occasionally fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay.
- (W)hether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him ....
- The exception (or apparent exception) for an offer expressly made without prejudice except as to costs ... as based on an express or implied agreement between the parties....
- In matrimonial cases there has developed what is now a distinct privilege extending to communications received in confidence with a view to matrimonial conciliation...."
- Burrows, D., "Over-riding Privilege", New Law Journal, London, England, January 22, 2010, page 89-90.
- Castano v Gabriel, 302 NYS 2d 943, at page 946 (1969)
- Duhaime, Lloyd, Civil Litigation Law
- Duhaime, Lloyd, Civil Litigation Law Dictionary
- Duhaime, Lloyd, Legal Definition of Cease and Desist Letter
- Duhaime, Lloyd, Legal Definition of Demand Letter
- Duhaime, Lloyd, legal definitions of Res Judicata, With Prejudice and Under Protest
- Halsbury's Laws of England, 4th Edition, Volume 17(1) (London: Butterworths LexisNexis, 2002), page 401
- Re Leite, Leite v. Ferreira, 72 L.T.Jour. 97
- Sager v Hunter Corporation, 665 F. Supp. 575 (1987)
- Tapper, Colin, Cross & Tapper on Evidence (10th Edition, London: Lexis-Nexis, 2004 page 497
- Unilever v Proctor & Gamble Co., 1999 EWCA Civ 3027