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Review Your SQE 1 Practice Records

Examination Timing: 00H00M01S

You act on behalf of Mr. Roberts, a businessman, in the defence of a claim against him by his former business partner, Mr. Smith. Mr. Smith is seeking repayment of a loan in the sum of £500,000, plus interest at a rate of 100% pursuant to the terms of a loan agreement alleged to have been evidenced in writing. Mr. Roberts has admitted the capital sum but denies that an agreement was entered into in writing or that any rate of interest was agreed between the parties. At the time of disclosure and the exchange of witness statements, Mr. Smith was allegedly unable to find a signed copy of the loan agreement. You are in the process of drafting instructions to Counsel to attend the Pre-Trial Review when you receive a copy of the loan agreement from Mr. Smith's solicitor in accordance with Mr. Smith's ongoing duty of disclosure. Mr. Roberts admits the validity of the document, including the interest rate of 100%. 

Which of the following best describes how you should advise your client to proceed?

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Given the late disclosure of the loan agreement and the admission by Mr. Roberts of its validity, it is prudent to consider the most effective strategy to minimise costs and potentially settle the matter. A Part 36 offer is advantageous because it provides a structured method for settlement negotiations and includes potential costs protection if the offer is not accepted and the matter proceeds to trial. Inviting the claimant to a without prejudice meeting (Option A) might delay proceedings and incur further costs without guaranteed results. Serving a Notice to Prove a Document at Trial (Option B) is unlikely to pressure the claimant significantly at this stage, given the admission of the document’s validity. Admitting the claim (Option D) outright without attempting to negotiate a settlement could be premature and not in Mr. Roberts' best interests. A Calderbank offer (Option E), while useful in some circumstances, lacks the same structured costs protection benefits as a Part 36 offer. 

Key Point: Part 36 offers provide a formal mechanism for settlement that can protect against adverse costs and create pressure to settle due to potential cost consequences if the offer is not accepted and the offeror achieves a better result at trial.

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