Offer of Judgment Law and Legal Definition
Offers of judgment are governed by federal and state rules of civil procedure, which vary by state. In some cases, if the offer is not accepted, and if the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred by the offeror after making the offer. Such a rule is designed to offer defendants an incentive to make serious settlement offers and to encourage plaintiffs to take these offers seriously because of the risk of proceeding to trial and paying the defendant's post-offer costs if the plaintiff fails to obtain a result more favorable than the offer of judgment.
The following is an example of a state statute governing offers of judgment:
" Except in a matrimonial action, any party may, at any time more than 20 days before the actual trial date, serve upon any adverse party, without prejudice, and file with the court, an offer to take judgment in the offerer's favor, or as the case may be, to allow judgment to be taken against the offerer, for a sum stated therein or for property or to the effect specified in the offer (including costs). If at any time on or prior to the 10th day before the actual trial date the offer is accepted, the offeree shall serve upon the offeror and file a notice of acceptance with the court. The making of a further offer shall constitute a withdrawal of all previous offers made by that party. An offer shall not, however, be deemed withdrawn upon the making of a counter-offer by an adverse party but shall remain open until accepted or withdrawn as is herein provided. If the offer is not accepted on or prior to the 10th day before the actual trial date or within 90 days of its service, whichever period first expires, it shall be deemed withdrawn and evidence thereof shall not be admissible except in a proceeding after the trial to fix costs, interest and attorney's fee. The fact that an offer is not accepted does not preclude a further offer within the time herein prescribed in the same or another amount or as specified therein."
