“He said, she said”: What you need to know to avoid commercial litigation (Part 1)

Nobody ever aims to become embroiled in litigation but sometimes things can go wrong, and one has no choice but to fight a claim. What can you do to avoid claims and increase your chances of winning in Court?

Solicitor Peter Livingstone has some essential advice.

• Know your rights and your legal duties: under English law, contracts can be formed in all sorts of different ways, and one does not necessarily have to sign a document in order for a contract to be formed. Consequently, disputes can arise as a result of the parties agreeing one thing on the phone, Party A putting slightly different terms to Party B in writing, Party B putting different terms to Party A, and everyone being confused about what was actually agreed.

You will not have much chance of successfully bringing or defending a claim if you do not know when or how the contract has been formed, or what its terms are. It is far safer to have all the negotiated terms down in black and white, and to ensure that a contract is formed only when the parties sign a contract.

• Why take the risk? Unfortunately, all too often people draft their own contracts or download inappropriate templates from the internet. Drafting a contract without being legally qualified and without understanding the potential implications is the perfect seedbed for litigation. If it matters (and it normally matters) instruct a solicitor to draft the contract.

• The meaning of words: litigation often arises where the parties to a contract are at cross purposes about what is expected – terms such as ‘profit’ are often used, but beware taking such words at face-value; if terms are not negotiated with precision and obligations pinned down in detail the common law will step in to make sense of the contract, but that does not mean that in Court the contract will be found to mean what you want it to mean.

• Get it in writing: Why? Written evidence is the best evidence one can have to advance a claim or to fend one off. Don't run the risk of the Court having to try and decide who is telling the truth about what was agreed in a 'he said/she said' situation.

• The Battle of The Forms: all businesses are keen to contract on terms which are preferential to them. Contracting on your standard Terms & Conditions is one way to get the deal you want, but it is not a magic bullet. It is no good having standard terms if your sales staff and management do not use them properly. Training your staff to spot and challenge customers' purchase orders which contain different standard terms, and training them to deploy your standard terms, can save a lot of hassle and expense.

For more information on Company Commercial law contact Katherine Gilmour on 01935 846059.

Or for help with Dispute Resolution please contact Peter Livingstone on 01935 846247.