§ 42.003.Making Settlement Offer

Five formal requirements, and each is a condition of the cost consequences.

A settlement offer must be in writing. An oral offer, however clear, carries no consequences under the chapter.

It must state that it is made under this chapter.

That requirement is the most important of the five, and the easiest to omit. A written offer that does not say it is made under the chapter is an ordinary settlement offer, and rejecting it costs nothing.

The statement is what puts the other side on notice of the risk, which is the fairness justification for the entire mechanism. A party cannot be penalised for rejecting an offer they did not know carried a penalty.

It must state the terms by which the claims may be settled. The offer has to be capable of acceptance, which means stating what is being offered and what would be given up.

It must state a deadline by which the offer must be accepted. A comparison between an offer and a judgment requires a fixed moment at which the offer was rejected, and the deadline supplies it.

It must be served on all parties to whom the settlement offer is made.

Subsection (b) is a deliberate omission from the list: the parties are not required to file a settlement offer with the court.

That keeps the offer out of the judge’s file, which matters in a bench trial and matters generally — a court should decide the case without knowing what either side offered.

The offer surfaces only afterwards, when a party seeks litigation costs and must then produce it.