Calderbank offer

A Calderbank offer is a settlement offer made on a "without prejudice save as to costs" basis.

It is an approach used to settle a dispute for a lower amount and avoid going to a court trial. It puts one side on notice that if the dispute goes before a court, and the outcome is worse than the Calderbank offer being made, the party making the Calderbank offer is entitled to higher recovery court costs, the fact the offer has been made may also be taken into account when considering the costs awarded.

Important constituents of such an offer are:

• It must be left open for acceptance for 21 days.
• It must offer to pay the other party’s reasonable costs incurred up to the point of acceptance if accepted within 21 days. Thereafter, acceptance being subject to the offeror’s costs incurred after the expiry of the 21 days being paid.
• It must say what is the position as to interest. Normally interest is included.
• It must say whether any counterclaim is taken into account in the offer.

It is named after the case Calderbank v. Calderbank in 1975. Mrs Calderbank before the dispute proceeded to the courts, showed she had a willingness to settle the dispute. If Mr Calderbank had accepted the offer made to him before the trial, he would have been in a better position because the outcome was less favourable to him than Mrs Calderbank’s earlier offer, and then neither would have had to go to court. The court ruled that Mrs Calderbank was entitled to her costs as from the date that she made her willingness to settle known.

It is an alternative to a Part 36 offer, which is a written offer to settle with a period of not less than 21 days during which it can be accepted. If it is not accepted in the stated period and the other party does not beat that offer then there will be costs consequences.

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• Arbitration v Adjudication.
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• Breach of contract.
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• Housing Grants, Construction and Regeneration Act.
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• Without prejudice.