Legal Definitions - offer of compromise

An offer of compromise is a proposal made by one party in a dispute to another, suggesting a way to resolve their disagreement outside of a full court trial or other formal legal proceedings. The primary goal is to settle the matter amicably, often by one party agreeing to pay money, perform an action, or refrain from an action, in exchange for the other party dropping their claims.

A crucial aspect of an offer of compromise is that, generally, it cannot be used in court as evidence that the party making the offer admits fault or liability. This legal rule encourages parties to negotiate and try to settle disputes without fear that their willingness to compromise will be held against them if negotiations fail and the case proceeds to trial.

Here are some examples illustrating an offer of compromise:

• Car Accident Settlement: After a minor fender bender, Driver A believes Driver B was at fault and threatens to sue for the cost of repairs and a rental car. Driver B, while not fully admitting fault, offers to pay Driver A a specific amount of money—say, $1,500—to cover the estimated damages, on the condition that Driver A agrees not to pursue a lawsuit. Driver B's motivation is to avoid the time, expense, and uncertainty of litigation.

  This illustrates an offer of compromise because Driver B is proposing a monetary payment to settle a potential legal claim (damages from the accident) with the explicit goal of avoiding a lawsuit. The offer itself is not an admission of liability.

• Business Contract Dispute: A small business owner ordered custom-made parts from a supplier, but the parts were delivered two weeks late, causing the business to miss a critical production deadline and lose revenue. The business owner informs the supplier they are considering legal action for breach of contract. To prevent a lawsuit and preserve their business relationship, the supplier offers to provide a 25% discount on the current order and a 10% discount on all future orders for the next year, in exchange for the business owner agreeing not to sue.

  This is an offer of compromise because the supplier is proposing a concession (discounts) to resolve a potential legal dispute (breach of contract) and avoid formal litigation, even if they might dispute the full extent of the damages claimed.

• Property Line Disagreement: Two neighbors are in a dispute because one neighbor built a new shed that appears to encroach slightly onto the other neighbor's property. The aggrieved neighbor sends a letter demanding the shed be moved or threatening to sue for trespass. The neighbor who built the shed, wanting to avoid a costly and contentious property dispute, offers to pay the aggrieved neighbor a one-time sum of $500 for a small easement (a legal right to use a portion of another's land for a specific purpose) to allow the shed to remain in its current location, thereby settling the matter amicably.

  This demonstrates an offer of compromise as one neighbor is proposing a monetary payment and a legal arrangement (easement) to resolve a potential property dispute (trespass) and prevent a lawsuit, without necessarily admitting they were entirely wrong in the first place.