Offer To Settle in Civil Litigation

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It is common to see parties bringing a civil suit action against another for a myriad of reasons, which can range from the trivial ones to the more serious matters. An offer to settle offers parties an alternative instead of pursuing the matter in court. Find out more below.

What is an offer to settle?

An offer to settle occurs when a party to a trial proposes an out of court settlement to the other party before the finality of their matter in court. Such an offer does not necessarily need to be monetary compensation. It could be in the form of abstinence, compensation, or even to perform a certain act. An offer to settle provides the parties with some form of  incentive as: 

  1. It allows both parties to save on legal cost (other than the cost of instituting a claim in court), provided that the parties are willing to accept the terms of the offer;
  2. It allows both parties to agree to a sum which both parties are willing to part with/receive instead of leaving the calculation of damages to the court; and
  3. The offending party does not have to admit to any liability.

The principle governing an offer to settle is laid down in Order 22B of the Rules of Court[1]. Such an offer:

  1. Can be made[2] and withdrawn[3] at any time before the court decides on the outcome of the matter between the parties in court; and
  2. If such an offer to settle specifies the time in which one party needs to accept the offer, such an offer is deemed to be withdrawn when the time expires[4].

An offer to settle can be made to multiple parties jointly or individually if they are more than one party in proceedings[5].

How to make/ accept/ withdraw an offer to settle?

ProcessFormRemarks
Making an offerForm 34[6]
  1. The terms of the offer must be set out in numbered paragraphs.
  2. Set out the time in which the other party is to accept the offer.
Withdrawing an offerForm 35[7]
  1. It can be withdrawn at any time, even if there is a clause specifying the expiry of the offer at a certain date [8].
Accepting an offerForm 36[9]
  1. Set clearly the terms of accepting such an offer.
  2. Can accept the offer at any time before the determination of the case, offer lapsed or withdrawn.
  3. Upon acceptance of such an offer, the court can incorporate the terms into the offer[10].


It must also be noted that the court must not know of such an offer even if it is not accepted until all questions of liability and relief other than cost have been determined by the court[11]
as this allows the court to make an impartial and independent assessment of the damages and claims of the matter without the influence of knowledge of the offer to settle, or at the very least, is seen to be making an impartial and independent assessment of the damages and claims.

What is the effect of accepting such an offer?

Generally, if an offer is agreed upon and accepted by all parties, the parties must comply with the terms of the offer and the matter is deemed to be disposed of save for the cost of instituting the claim in court. However, if a party fails to comply with the terms of the offer, the other party can continue to pursue the matter in court as if there is no offer to settle or the other party can make an application to the judge for a judgment according to what was agreed upon in the offer[12].

 

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1. 2012.
2. Order 22B Rule 2, Rules of Court 2012.
3. Order 22B Rule 3, Ibid.
4. Order 22B Rule 3 (1), Ibid.
5. Order 22B Rule 10, Ibid.
6. Order 22B Rule 1, Ibid.
7. Order 22B Rule 3 (3), Ibid.
8. Order 22B Rule 3 (1), Ibid.
9. Order 22B Rule 6 (1), Ibid.
10. Order 22B Rule 6 (2), Rules of Court 2012.
11. Order 22B Rule 5, Ibid.
12. Order 22B Rule 8, Ibid.


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