United Kingdom · civil

How to Respond to a Part 36 Offer in the UK (England and Wales)

A Part 36 offer is a tactical settlement tool governed by the Civil Procedure Rules in England and Wales, designed to force litigation compromises under the threat of severe financial penalties. If an opponent—such as an insurer, commercial landlord, or corporate defendant—serves you with one, you must act decisively before the 'relevant period' expires. Understanding whether to accept, reject, clarify, or counter-offer determines whether you recover your costs or end up paying your opponent's legal bills.

Understanding Part 36 Offers in England and Wales

In England and Wales, Part 36 of the Civil Procedure Rules (CPR) creates a formal settlement mechanism that operates entirely separately from ordinary common law contract negotiations. When an opponent serves a Part 36 offer, they are making a binding, 'without prejudice save as to costs' settlement proposal designed to exert maximum financial pressure on you.

Under CPR 36.5, a valid Part 36 offer must be in writing, explicitly state that it is made pursuant to CPR Part 36, specify a 'relevant period' of not less than 21 days during which the offering party will be liable for the receiving party's costs if accepted (where the offer is made at least 21 days before trial), and state whether it relates to the whole claim or part of it.

Opposing parties—frequently well-resourced institutions, aggressive employers, or insurance litigation panels—use Part 36 offers early to shift the costs burden onto you. Ignoring this letter or miscalculating your trial prospects can result in severe financial harm even if you win your underlying case.

The Severe Cost Consequences of CPR 36.17

The primary danger of a Part 36 offer lies in the costs consequences set out under CPR 36.17. If you reject or fail to accept a defendant's Part 36 offer, proceed to trial, and fail to obtain a judgment more advantageous than the offer, the default rule under CPR 36.17(3) mandates that the court will order you to pay the defendant's costs from the date the relevant period expired, along with interest on those costs.

Conversely, if you are a claimant who beats your own Part 36 offer at trial, CPR 36.17(4) allows the court to award you interest on your damages at up to 10% above base rate, costs assessed on the indemnity basis, interest on those indemnity costs at up to 10% above base rate, and an additional penalty sum of up to £75,000.

Courts must apply these consequences unless they consider it unjust to do so under CPR 36.17(5). Judges rarely find it unjust, meaning the financial penalties are almost automatic if you misjudge the trial outcome.

Your Tactical Options and Next Steps on Caunsel

You have four potential responses to a Part 36 offer: accept it within the relevant period, reject it outright, seek clarification, or make a counter-offer. Crucially, under the landmark Court of Appeal ruling in Gibbon v Manchester City Council [2010] EWCA Civ 726, Part 36 forms a self-contained code. Unlike standard contract law, making a counter-offer or rejecting the proposal does not automatically terminate a Part 36 offer; the original offer remains open for acceptance unless formally withdrawn in writing under CPR 36.9.

If you accept within the 21-day period, the general rule under CPR 36.13 is that you are entitled to your recoverable costs of the proceedings up to the date of service of notice of acceptance. If you accept after the relevant period expires, the court must determine costs liability unless the parties reach agreement under CPR 36.13(4).

Before making any decision, you should meticulously audit the validity of the offer and model your financial exposure. You can use Caunsel to research procedural rules, upload and organise your litigation documents in a secure case workspace, or list your dispute to consult with an independent solicitor before your deadline lapses.

Steps

• Verify the formal validity of the offer against CPR 36.5 (written notice, Part 36 reference, and a stated relevant period of at least 21 days).
• Calculate and calendar your exact deadline: note the deemed date of service under CPR 6.26 and pinpoint the final day of the 21-day relevant period.
• Conduct a realistic risk-benefit analysis by comparing the net settlement sum offered against your projected legal costs and the likelihood of beating that figure at trial under CPR 36.17.
• Serve written notice of acceptance under CPR 36.11 if you agree to the terms, or issue a formal response or Calderbank counter-proposal if you intend to negotiate.

Common mistakes

• Assuming standard contract law rules apply: believing that making a counter-proposal terminates the opponent's Part 36 offer (disproven in Gibbon v Manchester City Council [2010]).
• Allowing the 21-day relevant period to lapse through inaction, exposing yourself to adverse costs orders and indemnity interest under CPR 36.17.
• Failing to check whether the offer includes interest or costs, leading to unexpected shortfalls upon settlement.
• Relying on informal emails or phone calls to accept or vary the offer instead of serving formal written notice under CPR 36.11 and CPR Part 6.

Questions people ask

What happens if I accept a Part 36 offer within the 21-day relevant period?

Under CPR 36.13(1), when a claimant accepts a defendant's Part 36 offer within the relevant period, the claimant is generally entitled to their recoverable costs of the proceedings up to the date on which notice of acceptance was served. The claim is stayed upon acceptance under CPR 36.14.

Does making a counter-offer reject the Part 36 offer?

No. In Gibbon v Manchester City Council [2010] EWCA Civ 726, the Court of Appeal confirmed that Part 36 is a self-contained code where common law rules of offer and acceptance do not apply. Making a counter-offer does not extinguish the original Part 36 offer; it remains open for acceptance unless the offering party formally withdraws it under CPR 36.9.

Can I accept a Part 36 offer after the 21 days have passed?

Yes, provided the offer has not been formally withdrawn under CPR 36.9. However, under CPR 36.13(4) and CPR 36.13(5), if the parties cannot agree on costs liability for the period after the relevant period expired, the court will determine costs, typically ordering the accepting party to pay the offeror's costs incurred between the expiry date and the date of acceptance.

General information only, last updated 2026-10-11. Caunsel is not a law firm and does not practise law. AI answers and this guide are not legal advice. Verify filings, deadlines, and statutes with a licensed lawyer in United Kingdom.