Calderbank Letter Law and Legal Definition

Calderbank letter is a species of settlement offer delivered in the form of a letter. This letter can be used in the event that settlement is rejected and subsequent to trial or hearing of the litigation which results in terms similar to the rejected offer, costs are spoken to. This letter derived its name after the English judicial decision in which the principle was developed. Calderbank letter is an offer to settle made without prejudice, except as to costs. This letter should remain secret and outside the knowledge of the court until the judgment has been rendered at which point, when costs are spoken to, it may be revealed to the court and submissions made as to the applicability of cost penalties associated with the alleged similarity of the judgment to the offer to settle. Many jurisdictions have since codified the impact that the rejection of a formal offer to settle can have on costs if the result after trial is similar to the offer. Therefore, for encouraging the settlement of litigation, some jurisdictions even provide for a doubling of costs where a formal offer to settle has been made. But when rejected, the result at trial is in most points similar to the rejected proposed terms of settlement.