A more thorough explanation:

An offer of judgment is a settlement offer made by one party to allow a specific judgment to be taken against them. This means that the party making the offer is willing to accept a certain outcome in the case.

For example, if a plaintiff offers to settle a case for $10,000, they are making an offer of judgment. If the defendant accepts the offer, the case is settled for that amount. If the defendant rejects the offer and the case goes to trial, and the plaintiff wins a judgment for $8,000, the defendant may be required to pay the plaintiff's legal costs incurred after the offer was made.

In federal procedure and in many states, if the adverse party rejects the offer, and if a judgment finally obtained by that party is not more favorable than the offer, then that party must pay the costs incurred after the offer was made. This is known as a Rule 68 offer of judgment.

Another example of an offer of judgment is in a personal injury case. If the defendant offers to settle the case for a certain amount, and the plaintiff rejects the offer and goes to trial, but the jury awards the plaintiff less than the settlement offer, the plaintiff may be responsible for paying the defendant's legal costs incurred after the offer was made.