When a party doesn’t fulfil their end of the bargain under a contract, it is common for the other party to threaten legal proceedings. While you may have some basis for pursuing a claim, you still need to consider whether it is worthwhile. Simply put, if you pursue a claim incorrectly, you could end up in a far worse position and have to pay the legal costs of the party that wronged you. So what are some of the things you need to consider before pursuing a claim?
1. Are You Going to Pursue the Right Party?
It is important to take a step back and think about who is directly responsible for the issues and dispute you allege. While it is easy to blame the other party to the contract, they may not be the one directly at fault. It is important to determine who is responsible and assign liability to them.
2. Were You Partly at Fault?
This question is tricky – sometimes if you threaten or commence legal proceedings, you may force your opponent’s hand, and end up with a claim against yourself. Of course, you shouldn’t abandon a valid claim because of this, but you should give serious consideration to any possible liability you may have.
If both parties are at fault, then it is worth attempting an amicable resolution through discussions or correspondence. While this may not always be successful, it is worth trying. If you rush straight to proceedings, you may end up with a bigger dispute (and a more costly and time-consuming exercise) on your hands.
3. Do They Have the Financial Capacity to Pay?
Answering this is a major step and one that parties often overlook. There is nothing worse than being successful in your claim, only to find out that your opponent does not have the financial capacity to pay either the judgment or your legal costs. While there is no guarantee you will receive payment, it is prudent to undertake basic steps to see if the other party has property or other assets. Having property or assets may mean they can pay your costs and any judgment.
4. Can You Prove Your Case?
Before proceeding to court, you should undertake a thorough analysis of your matter including what documentation you have. If you don’t have evidence, it may mean you need to prove your case through discussions you may have had with the other side.
Of course, you can’t predict every possible event you may face in court but having your ‘ducks in a row’ and being organised will put you in great stead.
5. What is Your True Financial Loss or Damage?
Before embarking down a litigious path, you should ensure you conduct a full and honest appraisal as to what your damage truly is. If your claim is not significant, then you may be best to direct your time and resources to your business rather than pursuing a claim.
It is important to approach any disputes commercially. Quite often parties are trying to prove a point rather than thinking clearly and rationally. Pursuing a claim can be time-consuming and costly, and where possible, you should always try to resolve the issue externally.