December 2011 Archive

When to use the term 'without prejudice'

We often see ‘without prejudice’ on communications between parties in dispute. The suggestion seems to be that adding that banner to a letter might offer some magical protection down the line if the dispute is not resolved. It doesn’t, but a fuller explanation of the principle of ‘without prejudice’ might be useful. The term is designed to allow parties to negotiate without fear that concessions made will be taken as admissions harming their legal position if the dispute is not resolved.

Interpretation of contracts: Rainy Sky S.A v Kookmin Bank

This case involved a contract in which a shipbuilding company agreed to build and sell one vessel to each of six buyers. The buyers agreed to make pre-delivery payments for the vessel in return for refund guarantees from the shipbuilder’s bank. The shipbuilder experienced financial difficulties and entered into a debt workout procedure under Korean Law. The buyers sought reimbursement of the pre-delivery payments from the bank. The bank refused to pay. The dispute arose out of the interpretation of two clauses within the contract.
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