Can a Settlement Offer Be Used Against Your Business at Trial in California?

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Generally no. Under California Evidence Code section 1152, an offer to compromise a claim, and the conduct and statements made in negotiating it, are inadmissible to prove liability for the loss. An offer to pay half to end a dispute cannot be shown to the jury as an admission that the money was owed. The rule has limits: it bars one use of the evidence, does not make negotiations confidential, and does not cover a bare demand for payment. Kolmogorov Law, P.C. represents companies and their owners in business disputes.

Call (909) 235-6116 or contact us online to discuss a settlement offer made or received in a business dispute.

What section 1152 says

The statute covers two things. The first is evidence that a person, in compromise or from humanitarian motives, furnished or offered or promised money or any other thing, act, or service to someone who has sustained or claims a loss. The second is any conduct or statements made in negotiating it. Both are inadmissible to prove the person's liability for the loss or any part of it. (Evid. Code, § 1152, subd. (a).)

The purpose is to keep parties talking. The rule rests on the public policy favoring settlement without litigation and is meant to promote candor in negotiations. (Zhou v. Unisource Worldwide, Inc. (2007) 157 Cal.App.4th 1471.)

The mirror rule for the party making the claim

A companion section protects the other side of the table. Evidence that a person accepted, or offered or promised to accept, a sum of money or anything else in satisfaction of a claim is inadmissible to prove the invalidity of the claim or any part of it. Statements made in negotiation are covered the same way. (Evid. Code, § 1154.) A supplier that offers to take 70 cents on the dollar has not handed the customer proof that the invoice was inflated.

What the rule does not cover

Four limits matter in business disputes.

Other purposes. The sections exclude compromise evidence only when it is offered to prove liability for, or the invalidity of, the claim being negotiated. In the decision cited above, letters negotiating one claim were held admissible in a different lawsuit about a different claim. (Zhou, supra, 157 Cal.App.4th 1471.)

Payments on an undisputed debt. The statute does not affect evidence of partial satisfaction of a claim made without questioning its validity, when offered to prove the claim is valid. Nor does it affect a debtor's payment or promise to pay a preexisting debt, when offered to prove a new duty or the revival of the old one. (Evid. Code, § 1152, subd. (c).) Paying part of an invoice with a note that the balance will follow is not a protected offer.

Bare demands for payment. A letter that itemizes what the sender believes it is owed and demands payment is, in effect, a bill and not an offer of compromise. No specific discount is required: in the same decision, letters inviting the other side to make the first offer were treated as settlement discussions. A statement that is truly independent of any offer may be admitted as an admission. Courts decide which statements are connected to an offer in light of the policy favoring candor. (Zhou, supra, 157 Cal.App.4th 1471.)

Discovery. Sections 1152 and 1154 govern admissibility at trial. They do not create a privilege against discovery, so the other side may be able to obtain settlement communications if the request is reasonably calculated to lead to admissible evidence. (Volkswagen of America, Inc. v. Superior Court (2006) 139 Cal.App.4th 1481.) Mediation is different, because that statute protects communications from discovery as well. Our page on mediation confidentiality explains the stronger rule.

Apologies and goodwill gestures

Section 1152 reaches things furnished from humanitarian motives, not only bargaining. An apology is a separate question. California's statute on expressions of sympathy applies to statements about the pain, suffering, or death of a person involved in an accident, and it does not protect a statement of fault. (Evid. Code, § 1160, subd. (a).) It is not written for commercial disputes. In a contract dispute, an email saying "this was our mistake" is generally protected only if it was made in negotiating a compromise or in a mediation.

Formal offers under section 998

A statutory offer to compromise has its own rule. If it is not accepted before trial or within 30 days after it is made, whichever comes first, it is deemed withdrawn and cannot be given in evidence at the trial. (Code Civ. Proc., § 998, subd. (b)(2).) Service of the offer by mail extends the 30 days. (Code Civ. Proc., § 1013, subd. (a).) Our page on section 998 offers covers how those offers shift costs.

How to handle a settlement communication

A heading such as "confidential settlement communication" signals intent, but section 1152 has no labeling rule. It turns on whether there was an offer of compromise or a statement made in negotiating one. Several habits follow from the rules above.

Keep offers out of ordinary business email. A message that mixes an offer with account reconciliation invites an argument about which sentences are covered.
Make the purpose visible. An offer to compromise, or an invitation to discuss one, is what separates a negotiation from a bill.
Do not volunteer facts the offer does not need.
Remember that the other side may see the exchange in discovery, and that it may be offered for a purpose other than liability.
If candor matters more than speed, consider mediation.

Our guides to sending a demand letter and to responding to one cover the letters that may open these talks.

If the other side tries to use your offer

The objection is made before or at trial, for example by a motion in limine asking the judge to exclude the offer and the negotiation statements. Expect the response to name another purpose for the evidence. The court then decides whether that purpose is real or is liability by another name. A business that wants to use the other side's offer faces the same test in reverse.

What to bring to the first meeting

Every letter, email, and text in which an offer was made or discussed, in order.
The demand letter or complaint that started the dispute.
Any agreement about the confidentiality of the talks.
Notes of calls in which numbers were discussed, with dates and participants.
Records of any partial payments and what was said when they were made.

Frequently asked questions

I offered to pay half just to end the dispute. Can they use that offer against me at trial?

Not to prove that you owed the money. California Evidence Code section 1152 makes an offer to compromise, and the statements made in negotiating it, inadmissible to prove liability for the loss. The offer could still surface for a different purpose, and the other side may be able to ask about the negotiations in discovery. Facts admitted outside the negotiation are not covered.

What does Evidence Code 1152 say?

California Evidence Code section 1152 provides that evidence a person offered or furnished money or anything else in compromise, or from humanitarian motives, to someone claiming a loss is inadmissible to prove liability for that loss. The bar extends to conduct and statements made in negotiating the compromise. Section 1154 applies the same idea to a claimant's offer to accept less.

Are settlement negotiations confidential in California?

Not because of Evidence Code section 1152. That section limits what can be admitted at trial to prove liability. A California Court of Appeal has explained that it does not create a privilege against discovery, in contrast to the mediation statute, which protects communications from both admission and discovery. Outside mediation, confidentiality depends on what the parties agreed or a court ordered.

Does writing "confidential settlement communication" at the top of an email protect what I say in it?

The label helps show intent but does not decide the question. California Evidence Code section 1152 has no labeling rule. It asks whether there was an offer of compromise or a statement made in negotiating one. A demand for everything the sender believes is owed, with no concession, has been described as a bill and not a settlement offer, whatever it is called. Keep real offers separate from ordinary business correspondence.

Can an apology be used as evidence in a business dispute?

It can. California Evidence Code section 1160 protects expressions of sympathy only when they relate to the pain, suffering, or death of a person involved in an accident, and it does not protect a statement of fault. In a commercial dispute, an apology that admits fault is generally admissible unless it was made in negotiating a compromise under section 1152 or in a mediation.

Talk to a California civil litigation attorney

If your business is about to make a settlement offer, or an old offer is being used against it, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is a business litigation firm in Irvine, California.

This page provides general information about California law and is not legal advice. Outcomes depend on the communication, its purpose, and the court.