Rule 68 provides an offer of judgment mechanism specifically designed to encourage settlements. It allows a defendant to accept an adverse judgment for a specified amount or to a certain effect. The plaintiff's acceptance resolves the case; the plaintiff is penalized if he refuses the offer and the court's judgment is less favorable than the defendant's offer. Unfortunately, attorneys rarely use the rule as a pretrial settlement device, because its language is ambiguous and courts often cannot reconcile the rule's purposes with other basic legal principles. The ambiguities surround the meaning of the word 'costs,' the circumstances under which a plaintiff's final judgment will be considered more or less favorable than that specified in the offer of judgment, and the use of the rule in complex multiparty litigation. In addition, courts have applied the rule inconsistently. Proposed language for resolving these problems and 288 footnotes are supplied.