Settlement offer letter template

Most small claims do settle. The reasons are straightforward — both sides face uncertainty at hearing, both sides face the time of preparation and attendance, and both sides have already paid (or will pay) court fees that are non-recoverable in part. A settlement that is reasonable for both sides ends the dispute on day 1 instead of day 90.

Settlement offer letter template

A formal written offer does two things at once. First, it gives the other side a clear way to end the dispute on terms — it is harder to reject a specific offer than to ignore vague suggestions of compromise. Second, it builds in costs protection: if the other side rejects an offer and then does worse at trial, the court can require them to pay your costs from the date the offer should have been accepted.

In small claims, the costs protection is more limited than in larger litigation (because most costs are non-recoverable anyway), but the principle still bites — particularly for hearing fees and witness expenses, which can run into hundreds of pounds.

Always mark "WITHOUT PREJUDICE SAVE AS TO COSTS" at the top. Without that label, the offer is open correspondence and can be used against you on liability.

When to use Part 36 instead

CPR Part 36 sets out a formal regime for settlement offers with prescribed cost consequences. Because the small claims track restricts cost recovery so heavily (CPR 27.14), the additional teeth of Part 36 are blunted in this context — but they still apply to interest, hearing fees, and certain expert and witness costs.

For a properly compliant Part 36 offer, you must use the prescribed wording: identify the offer is made under Part 36, specify a "relevant period" of at least 21 days for acceptance, state whether it is for the whole claim or part, and clarify whether it includes interest. Get the formula wrong and the offer falls back to a normal Calderbank offer — which is usually fine for small claims anyway.

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