Reading a Without-Prejudice Letter Properly

The phrase "without prejudice" is possibly the most misunderstood piece of legal shorthand in commercial correspondence. It does not mean the letter is confidential. It does not mean it cannot be shown to anyone. And it does not mean it stops mattering the moment negotiations break down.

What the rule actually protects

Without-prejudice protects genuine attempts to settle a dispute from being used as evidence of admission in later court proceedings. That is it. It protects the negotiation from being turned into a weapon in litigation.

What it doesn't protect

It does not protect statements that are not genuinely part of a settlement discussion. It does not protect fraud, threats, or unrelated claims dressed up as settlement discussion. Courts will look past the label.

"Without prejudice save as to costs"

This variant, often called a Calderbank offer, reserves the right to show the letter to the judge on the question of costs at the end of the case. If you make a reasonable offer and the other side beats it, they may pay the price.

The bottom line

Write "without prejudice" only when you are genuinely attempting to settle. Write "without prejudice save as to costs" when you want the tactical protection at the end. And read every such letter you receive with the same discipline.