Part 36 offers & settlement
A Part 36 offer is a formal, self-contained settlement mechanism with powerful costs consequences designed to encourage settlement. SQE1 tests the requirements of a valid offer, the effect of acceptance, and the consequences of failing to beat one at trial.
What "Part 36 offers & settlement" covers
- A Part 36 offer must comply with the formal requirements in CPR 36.5, including being in writing, stating it is made under Part 36 and specifying a relevant period of at least 21 days.
- If an offer is accepted within the relevant period, the claimant is generally entitled to costs up to the date of acceptance on the standard basis (CPR 36.13).
- If a claimant fails to obtain a judgment more advantageous than a defendant's offer, the claimant usually pays the defendant's costs from the end of the relevant period, with interest (CPR 36.17(3)).
- If a claimant obtains a judgment at least as advantageous as its own offer, it may receive indemnity costs, enhanced interest up to 10% above base rate, and an additional amount up to £75,000 (CPR 36.17(4)).
- The fact and terms of a Part 36 offer must not be communicated to the trial judge until all questions of liability and quantum have been decided.
- Part 36 is a self-contained procedural code, so ordinary contractual rules of offer and acceptance do not apply (Gibbon v Manchester CC).
- Settlement terms are commonly recorded in a Tomlin order, which stays the proceedings on agreed terms scheduled to the order while preserving a route to enforce them.
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For part 36 offers & settlement, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Forgetting the enhanced consequences where a claimant beats its own offer — indemnity costs, up to 10% enhanced interest and the additional amount.
- Assuming common law offer-and-acceptance rules apply; Part 36 is a self-contained code and, for example, a counter-offer does not destroy an earlier Part 36 offer.
- Overlooking the requirement that the offer not be revealed to the trial judge until costs are being decided.
Learn and practise this subtopic
A guided lesson and exam-style questions on part 36 offers & settlement.
FAQ
Is part 36 offers & settlement tested on SQE1?
Yes — part 36 offers & settlement is part of the SQE1 Dispute Resolution syllabus (FLK1) and can appear in single best answer questions.
How is part 36 offers & settlement examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (CPR Part 36, CPR 36.5 (form and content)) helps.