You will often see this heading written on the top of settlement agreements or correspondence relating to negotiations or an offer of a settlement.
a) Without Prejudice
Generally, statements made in an attempt to settle a dispute are “without prejudice”, which means that they cannot be put before a court or tribunal as evidence against either party.
In essence, it means that the communication is being made “off the record”, allowing the parties to negotiate behind a veil of confidentiality.
The idea behind this is to allow free discussion to settle a claim without fear that any admissions or concessions made in that discussion could later be used against the parties in court if negotiations break down and a settlement is not concluded.
The parties need to remember that just marking communications “without prejudice” does not automatically give a communication that protection.
There needs to be a dispute in existence, and the communication must be a genuine attempt to settle that dispute.
b) Subject to Contract
The wording “subject to contract” means that the parties wish to remain uncommitted until a formal agreement has been finalised and all terms are known and signed off.