Form N242A: Part 36 Offer to Settle — Rules, Deadlines & Costs

At a glance

• What it is: the standard form for making a Part 36 offer — a formal written settlement proposal under Section I of Part 36 of the Civil Procedure Rules 1998 (CPR).
• Formal requirements (CPR rule 36.5(1)): in writing; states clearly it is made under Part 36; specifies a "relevant period" of not less than 21 days; states whether it covers the whole claim, part of it, or a specific issue; and states whether it takes into account any counterclaim.
• If accepted within the relevant period (CPR rule 36.13(1)): the claimant is entitled to the costs of the proceedings up to the date notice of acceptance was served, assessed on the standard basis if not agreed.
• If a claimant beats their own offer at trial (CPR rule 36.17(4)): the defendant normally pays interest on the award (up to 10% above base rate), the claimant's costs on the indemnity basis from the end of the relevant period, interest on those costs, and an additional amount of 10% of the first £500,000 awarded plus 5% above that, capped at £75,000.
• If a claimant fails to beat a defendant's offer (CPR rule 36.17(3)): the defendant normally recovers costs — not automatically on the indemnity basis — and interest on those costs, from the end of the relevant period.
• Fixed recoverable costs cases (CPR rule 36.24): in most fast-track and some intermediate-track claims, the indemnity-costs element above is replaced with a 35% uplift on the applicable fixed costs; the interest and additional-amount elements still apply.
• Confidentiality: treated as "without prejudice except as to costs" under CPR rule 36.16 — the trial judge is not told about it until the case is decided.
• Withdrawal: an offer can be withdrawn or worsened at any time by written notice under CPR rules 36.9–36.10; withdrawn before the relevant period expires, it only takes effect once that period would have ended anyway.
• Small claims track: Part 36 does not apply at all — CPR rule 27.2(1)(g) excludes it outright, and GOV.UK confirms Form N242A cannot be used once a claim is on that track.
• Both directions on one form: Form N242A includes a Notice of Acceptance section, so the same form can be used to make the offer and, later, to accept it.

What a Part 36 offer is, and why it matters

A Part 36 offer is a formal settlement offer made under the self-contained procedural code set out in Part 36 of the Civil Procedure Rules 1998. It can be made by either side, at almost any stage — CPR rule 36.7(1) allows an offer "at any time, including before the commencement of proceedings" — and it is made, in law, at the moment it is served on the other party (rule 36.7(2)).

CPR rule 36.2(3) confirms a Part 36 offer can cover the whole, part, or any specific issue of a claim, counterclaim or other additional claim, or an appeal or cross-appeal from a trial decision. GOV.UK's own guidance on Form N242A confirms the form can also be used to settle detailed costs assessment proceedings.

What separates a Part 36 offer from an ordinary "without prejudice" letter is the automatic costs machinery attached to it. If the offer meets the formal requirements in rule 36.5 and the receiving party does not beat it at trial, CPR rule 36.17 requires the court to impose specific costs consequences against them — not as a matter of the court's general discretion, but as the default outcome unless the court considers it unjust. That is what makes Part 36 a genuine pressure tool rather than just a negotiating letter.

The form also has dedicated content requirements for personal injury claims involving future pecuniary loss (rule 36.18), claims for provisional damages (rule 36.19), and cases where recoverable state benefits must be deducted from any compensation under the Social Security (Recovery of Benefits) Act 1997 (rule 36.20).

The formal requirements: CPR rule 36.5

Rule 36.5(1) sets out five things a Part 36 offer must do. Miss any of them and the offer will not carry Part 36's automatic costs consequences, however generous its terms:

1. Be in writing.
2. Make clear that it is made pursuant to Part 36. The wording does not need to be magic words, but it must be unambiguous that the offer is intended to trigger the Part 36 regime.
3. Specify a relevant period of not less than 21 days. This is the window within which the offeree is liable for the offeror's costs (in the claimant's case, under rule 36.13) if they accept. Rule 36.5(2) disapplies this requirement only where the offer is made less than 21 days before the start of trial — in which case the "relevant period" runs instead to the end of the trial.
4. State whether it relates to the whole claim, part of it, or a specific issue — and if so, which part or issue.
5. State whether it takes into account any counterclaim.

Where the offer is a defendant's money offer, rule 36.6(1) requires it to be a single lump sum (subject to narrow exceptions for personal injury and provisional damages offers under rules 36.18 and 36.19). A defendant's offer to pay later than 14 days after acceptance is not treated as a Part 36 offer unless the claimant accepts it anyway.

By default, a Part 36 money offer is treated as inclusive of all interest up to the end of the relevant period (rule 36.5(4)) — if the offeror wants interest to keep accruing after that date, the offer needs to say so expressly (rule 36.5(5)).

How to make an offer using Form N242A

1. Decide what you are offering and who it binds. Work out whether you are settling the entire claim, a particular issue, or a counterclaim, and identify the offeror and offeree precisely. A Part 36 offer can come from either side, so be specific about scope.
2. Check the claim is not on the small claims track. Under CPR rule 27.2(1)(g), Part 36 has no application there at all, and GOV.UK's guidance on this form confirms the same thing. If the claim is worth £10,000 or less (lower thresholds apply to personal injury and housing disrepair elements), confirm the track allocation before relying on Part 36.
3. Complete Form N242A in full. Enter the names of the claimant and defendant exactly as they appear on the claim form, include the case reference, and address both required statements under rule 36.5(1)(d)–(e) — what the offer covers, and whether it accounts for any counterclaim. Neither can be left implied.
4. Set the relevant period at 21 days or more. A shorter period does not meet the Part 36 test unless the offer is made less than 21 days before trial (rule 36.5(2)), in which case the automatic costs consequences will not usually bite unless the court has abridged the period.
5. Address personal injury, provisional damages and benefits if relevant. A claim involving future pecuniary loss must meet the extra content requirements in rule 36.18. An offer that includes provisional damages must state the assumptions and time limit under rule 36.19. A defendant settling a personal injury claim must state, under rule 36.20, whether the offer disregards recoverable benefits or is intended to include them — and if the latter, the gross figure, the deductible benefits, and the net amount offered.
6. Sign, date, and serve the form on the other side. Practice Direction 36A confirms that where the offeree is legally represented, the document must be served on their legal representative (PD 36A, para 1.2). Keep proof of service — the offer takes effect on service, and can generally be accepted at any time until it is withdrawn, though the costs position changes once the relevant period ends.

If the offer is accepted: the costs consequences (CPR rule 36.13)

Accepting a Part 36 offer is not simply "case closed" on costs — the outcome depends on timing.

Accepted within the relevant period. Under CPR rule 36.13(1), the claimant is entitled to the costs of the proceedings, including recoverable pre-action costs, up to the date notice of acceptance was served on the offeror. These are assessed on the standard basis if the amount is not agreed (rule 36.13(3)). Where a defendant's offer covers only part of the claim and the claimant abandons the rest on accepting, the claimant is only entitled to costs of that part unless the court orders otherwise (rule 36.13(2)).

Accepted after the relevant period has expired. If the offer covers the whole claim and is accepted late, rule 36.13(4)–(5) says the court must, unless it considers it unjust, order that the claimant recovers costs up to the date the relevant period expired, and then pays the offeror's costs from that date until the date of acceptance. If the offer only covers part of the claim, or was made less than 21 days before trial, liability for costs is decided by the court rather than following this default split.

Acceptance also has a knock-on procedural effect: under rule 36.14, the claim (or the relevant part of it) is automatically stayed on the terms of the offer, and any sum agreed must normally be paid within 14 days of acceptance — if it is not, the claimant can enter judgment for the unpaid amount.

If the offer is rejected and not beaten at trial: the costs consequences (CPR rule 36.17)

This is the part that gives Form N242A its bite, and the consequences are asymmetric — they differ depending on which side made the offer.

If the claimant's offer is not beaten by the defendant at trial — meaning judgment is at least as advantageous to the claimant as their own offer — CPR rule 36.17(4) says the court must normally order that the claimant is entitled to:

• interest on the sum awarded at a rate of up to 10% above base rate, running from the date the relevant period expired;
• the claimant's costs on the indemnity basis from that same date;
• interest on those costs, also up to 10% above base rate; and
• once the case has been fully decided, an additional amount calculated as 10% of the first £500,000 of the award, plus 5% of anything above that figure, subject to an overall cap of £75,000. This is only awarded once per case.

If the defendant's offer is not beaten by the claimant at trial, rule 36.17(3) says the court must normally order that the defendant recovers their costs, plus interest on those costs, from the date the relevant period expired. This consequence does not automatically put the defendant's costs on the indemnity basis, and there is no equivalent "additional amount" available to a successful defendant.

The court can depart from either outcome if it would be unjust not to. Rule 36.17(5) lists the factors the court must weigh: the terms of the offer, how far before trial it was made, what information was available to the parties at the time, how the parties behaved in giving or withholding that information, and whether the offer was a genuine attempt to settle. Courts apply this sparingly — treating it as a low bar would blunt the whole point of the regime.

These consequences do not apply to an offer that has been withdrawn, that has been worsened and then beaten anyway, or that was made less than 21 days before trial (unless the court abridged the relevant period) — rule 36.17(7).

A note on fixed recoverable costs cases

Since October 2023, most fast-track claims and some intermediate-track claims (broadly, up to £100,000 in value) fall under the fixed recoverable costs regime in Part 45. CPR rule 36.24 modifies rule 36.17 for these cases: instead of indemnity-basis costs, a claimant who beats their own offer receives an uplift of 35% on the difference between the fixed costs applicable when the relevant period expired and the fixed costs applicable at judgment. The enhanced interest and the additional-amount elements of rule 36.17(4) still apply in full. If your claim may fall within the fixed costs regime, this is worth checking before assuming the indemnity-costs figure applies.

Confidentiality: without prejudice except as to costs

CPR rule 36.16 treats a Part 36 offer as "without prejudice except as to costs." The fact that an offer was made, and its terms, must not be communicated to the trial judge until the case has been decided (rule 36.16(2)). This keeps the trial itself fair — the judge deciding liability and quantum should not know what either side was prepared to accept — while still letting the costs regime work once judgment is handed down. The exceptions are narrow: where a defence of tender before claim has been raised, where the case has already been stayed following acceptance of an offer, or where both parties agree in writing that the rule should not apply.

Withdrawing, changing or clarifying an offer

Under CPR rule 36.9, a Part 36 offer can be withdrawn, or its terms made less favourable, at any time before the offeree has served notice of acceptance, simply by serving written notice. What happens next depends on timing, under rule 36.10:

• If withdrawal is served after the 21-day relevant period has expired, it takes effect straight away — no court permission needed.
• If it is served before the relevant period expires, it only takes effect once that period would have run out anyway. Withdrawing early does not shorten the offeree's genuine window to accept.
• If the offeree accepts the original offer before the relevant period ends despite the withdrawal notice, that acceptance stands — unless the offeror applies to the court for permission to withdraw within 7 days of the acceptance notice (or before trial starts, if earlier). The court will only grant permission where there has been a change of circumstances and it is in the interests of justice to allow it.

Separately, CPR rule 36.8 lets the offeree ask the offeror to clarify an ambiguous offer within 7 days of it being made. If the offeror does not respond within a further 7 days, the offeree can apply to the court for an order requiring clarification, unless the trial has already started.

Common mistakes to avoid

• Treating a settlement letter as a Part 36 offer without checking rule 36.5. If any of the five formal requirements is missing, the offer will not trigger the automatic costs consequences, however sensible the figure.
• Setting the relevant period at less than 21 days by mistake. Outside the narrow "less than 21 days before trial" exception, this is fatal to the offer's Part 36 status.
• Trying to make a Part 36 offer on a small claims track case. CPR rule 27.2(1)(g) excludes Part 36 there entirely — check the track allocation first.
• Forgetting to state the counterclaim position. Rule 36.5(1)(e) requires this expressly; silence is not the same as "no."
• Assuming indemnity costs apply automatically to every winning offer. They do not apply to a successful defendant's offer under rule 36.17(3), and in fixed recoverable costs cases the 35% uplift under rule 36.24 replaces indemnity costs even for a successful claimant's offer.
• Serving on the wrong address once the other side has a solicitor. Practice Direction 36A requires service on the legal representative once one is instructed.

About this guide

This guide provides general information about Form N242A and CPR Part 36 as they apply in England and Wales. It is not legal advice, does not take account of your specific circumstances, and reading it does not create a solicitor–client relationship. Part 36 has been amended repeatedly since it was substituted in its current form in 2015 — most recently in October 2023 — so always check the current text of Part 36 and Practice Direction 36A, both maintained by the Ministry of Justice, before relying on any of it. For advice on your own situation, speak to a regulated adviser.