General legal practice prescribes that when an admission is made within a letter, with the result of both parties reaching a mutual agreement, such admission may be made without prejudice. The inferred understanding is that such an admission would not form part of any litigious evidence should the matter end up in court.
A debtor and a creditor can enter into a written contract in which the debtor firstly acknowledges that she or he owes the creditor money, thus admitting liability. Secondly, that the debtor undertakes to pay the creditor back, generally in installments. The legally binding document used to solidify this agreement between the creditor and the debtor is an Acknowledgement of Debt, sometimes referred to as an “AOD”.
The question then is whether an acknowledgment of debt stated in a letter without prejudice, can result in the letter being admitted as evidence?