The WP rule is to encourage settlement discussions without parties weakening their position in the formal dispute. Basically, if this rule applies, people can speak and write openly without fear that what they are saying may be used against them in court or arbitration.
The purpose and intended effect of the words “without prejudice” is to prohibit a party from using the doctrine of res judicata (from the Latin, “a thing decided”) in any later actions on the subject matter.
The without prejudice (WP) rule will generally prevent statements made in a genuine attempt to settle an existing dispute, whether made in writing or orally, from being put before the court as evidence of admissions against the interests of the party which made them.
The 'without prejudice' privilege means parties to a dispute can make concessions and promises without fear that their words will be used later in court.
Dismissal without prejudice means that the judge dismissed the plaintiff's or prosecutor's case without damaging their right to have their matter heard in court later. A prosecutor may ask to withdraw the case against a person to have more time to make a case stronger, find more evidence or question other witnesses.
In your first without prejudice letter, be selective and keep some issues in reserve for the final negotiating stages. Try not to over-emphasise all the ways you think they've mistreated you. Instead stop and think if there is a way in which you can more subtly mention their behaviour.
“Without Prejudice” means that you are sending a communication in an honest attempt to compromise a matter, in which you might make a concession (either expressly or implicitly) to the other side that cannot be later put into evidence in Court.