When negotiating a contract or settlement agreement, parties may include a “without prejudice” clause to protect their discussions and negotiations from being used against them in future legal proceedings.
The term “without prejudice” is a legal term used to indicate that any communications or offers made in the context of negotiations are made without waiving any legal rights or obligations. This means that if the negotiations fail and the parties end up in court, any offers made during negotiations cannot be used as evidence against either party.
Without prejudice clauses are commonly used in settlement agreements, where parties are attempting to resolve a dispute without going to court. In the context of a settlement agreement, a “without prejudice” clause is typically found at the beginning of the document, stating that any discussions or negotiations are without prejudice to the rights of either party.
It is important to note that a “without prejudice” clause only applies to communications made in the context of negotiations. Any written agreement or settlement reached as a result of negotiations can still be used as evidence in court. The clause only protects the discussions leading up to the agreement.
Additionally, there are limitations to the protection provided by a “without prejudice” clause. If a party acts in bad faith during negotiations or engages in fraudulent behavior, communications made during negotiations can still be used as evidence in court.
In conclusion, including a “without prejudice” clause in a contract or settlement agreement can provide valuable protection to parties during negotiations. However, it is important to consult with a legal professional to ensure that the clause is properly drafted and will provide the desired level of protection.