Comment

Every profession and industry has its own quirky jargon. Some easier to understand by the lay person than others.

Legal jargon, in particular, can be a minefield. It spans the use of specialised terminology particular to the legal profession (words like tort, affidavit, conveyancing and litigation), foreign terminology (eg. habeus corpus and ex parte) and, frankly, very archaic language.

Lawyers seem to have an enduring, loving relationship with words like hereto, whereupon and thereafter.

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Recognising that it is generally important for clients and other parties to understand the words and terms used in legal documents, there has been a movement by the legal profession over more recent years to replace the use of archaic terms, foreign (lots of Latin) phrases and complicated technical terminology with plain, everyday language understood by most people.

Despite this, the fact remains that to most folk outside the legal field (and sometimes for us lawyers too), interpreting legal documents and jargon, remains challenging, and can lead to confusion, mis-interpretation and sometimes unwanted consequences.

Then there are terms used by lawyers which have extended to common use, in both business and personal transactions.

Terms like due diligence (used to explain the process of doing your homework before committing to a legally binding agreement), and caveat emptor (let the buyer beware, as the risk sits with the buyer, not the seller) are two examples, but there are infinitely more.

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Here is a legal jargon 101 on a particular phrase whose use is not uncommon in the business world, in the context of disputes.

We often see the use of the phrase "without prejudice" in written communication.

Over the years I have seen many examples of it being stamped loudly, proudly and in capital letters on emails and letters written between parties at war, and on occasion by those not in dispute. So, what does the term actually mean?

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Generally, the "without prejudice" principle means that statements made in such communications, either in writing or verbally, made in a genuine effort to resolve a dispute, will not be admissible in court against the maker if the dispute is not settled and court proceedings are required.

So, concessions that are made by parties as part of negotiations to effect compromise cannot later be produced to the court if they are made on a "without prejudice" basis.

The principle is a good one, and often paves the way for frank, meaningful discussion where cards are put on the negotiating table, compromise is reached and claims are resolved.

For example, you may apply the term to a written offer to accept less than the amount you claim another party owes you, in an effort to resolve a dispute.

The fact remains that to most folk outside the legal field interpreting legal documents and jargon, remains challenging. Photo / File
The fact remains that to most folk outside the legal field interpreting legal documents and jargon, remains challenging. Photo / File

If your offer is not accepted, the other party cannot rely upon your offer as evidence that you were prepared to settle for less than you have claimed.

However, I have not uncommonly seen the term being misused, with the party relying on it not appreciating that merely placing the words "without prejudice" in a letter or email does not necessarily make it so.

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It will only be protected from future production in a court if there is a genuine dispute, and if it is a genuine attempt to settle that dispute.

For instance, if the words are used in communications (these can be verbal as well as written) which contain threats if an offer is not accepted, the communication will be admissible to prove the threat.

If the parties are in a form of negotiations not aimed at resolving a dispute but for the purposes of agreeing terms of a contract, there will be no privilege from production of the communications.

Lisa Douglas Auckland-based partner -- Treadwell Gordon law firm.
Lisa Douglas Auckland-based partner -- Treadwell Gordon law firm.

Generally, the term "without prejudice" should not be used in communications (or will not be privileged from production in court) where there is no dispute or a genuine effort to resolve a claim, the parties are merely negotiating the terms of an agreement and/or where you are making a demand (eg. for payment) without putting forward any concessions or suggestions for resolution.

There have also been cases, particularly in the employment area, where the only correspondence which set out an employee's grievance was embedded in "without prejudice" letters, with the result that there was no evidence that could be produced to the court to show that the employee had raised a grievance with the 90-day period provided by the relevant employment law legislation.

When used appropriately, the "without prejudice" phrase can provide a forum for parties to speak freely and reach compromise and settlement.

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Be aware though, that it is commonly misused and may not achieve the intended purpose of the communication. Use the term cautiously.