It allows parties involved in settlements, compromises, negotiations and mediations the right to make offers and concessions in the interest of resolving a dispute without harming (prejudicing) their formal positions. The opposing party will be forbidden from referring to the without prejudice communication in the court proceedings, except perhaps when the issue of costs is being decided.  

Many legal systems recognise the value in allowing such communications. It enables parties to enter into frank and open discussions, encouraging settlements that save both the parties and the courts time and money. In common-law countries the concept is well established and relied on by parties, whereas it has only gradually emerged in some civil law countries.