I recently spent the day in a local courthouse as a witness in a civil court contractual dispute between one of my clients and a service provider
Turns out my client won the case, but I don’t think any of us enjoyed the experience. Going to court can be a costly and sobering exercise. The biggest revelation came at the outset of the day when the judge used his opening remarks to assure both sides that one of us would lose, and urged us to go away and try to reach a settlement rather than continue the proceedings.
(Essentially the numbers were such that, with the original claim invoked and each party’s costs, neither stood to really win if it came down to dollars alone!)
We did as advised and spent an hour or so trying to reach agreement, to no avail. So back we went to spend most of the remainder of the day in the courtroom arguing the case.
The process underlined for me a number of critical lessons relevant to any business owner, large or small:
6 critical lessons for business owners (from my day in court):
1. Make sure contracts are clear and unambiguous
Make sure any contract or agreement you enter into for provision of services for your business or a project is clear, unambiguous and defined as to:
- scope of works and expectations
- measurement of performance to the contract
- claims and payment basis
- payment processes and associated dispute processes.
2. Document communications
Always document communications with service providers in a timely manner, where there is a difference or dispute relating to a claim or the contract.
3. Document offers to settle
If you make an offer to settle a dispute before you go to court, make sure it is documented to the other party in writing.
4. Try to settle out of court
Be well satisfied that you can answer this question: Have I done everything reasonably possible to try and mediate and settle the matter out of court?
5. Get good legal advice
Before considering whether to fight a claim, make sure you get good, practical and pragmatic legal advice. Be clear about:
- the probability of success
- what it will cost you to achieve the outcome
- what proportion of those costs can be claimed against the other side
- the worst-case outcome for you if you lose.
6. Focus on the facts
They matter most in court!
James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.