Confidential, without prejudice and subject to contract?

I’m negotiating a contract with a potential reseller (software services). He produced a document listing the points we agreed at a meeting.  At the top it is marked “Confidential, without prejudice and subject to contract”. What does “without prejudice” mean in this situation?

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Alasdair Taylor's Answer

Not very much.

It’s usual for “heads of terms” (aka heads of agreement, heads of terms) to be confidential, and usually at least some or all of their provisions are not binding (hence “subject to contract”).

However, the words “without prejudice” are used by lawyers in inter-party communications in the context of litigation, or a dispute which may lead to litigation. If a communication is without prejudice then in principle it should not be put before a judge during litigation. The phrase makes little sense in the context of non-contentious contractual negotiations.

For a summary of the without prejudice rule, see:

http://uk.practicallaw.com/2-107-7511

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