Going to court to enforce your contractual rights or defending your rights against someone else wanting to deprive you of them is sometimes unavoidable and sometimes the best way to protect yourself or your business. But proper risk management in the contractual process can often avoid many of the problems that may arise further down the line. So, what do I recommend?
Get a good contract drafted by a good contract lawyer
Contracts which are drafted by those inexperienced in drafting or inexperienced in the particular field are often simply not fit for purpose. It is also not uncommon to see people using standard pro-forma contracts which are designed to suit a number of purposes. Sadly, however, in the field of contract law, one size does not fit all, and these sort of arrangements are very rarely watertight. As recent case law both in Scotland and England shows, the last thing that you want is ambiguity as to your rights and obligations. So, taking the time to instruct your lawyer and put a proper contract in place is essential and while it won't guarantee that no disputes will arise, it will make life much easier for you if they do.
"The moral of the story is to agree first and start work later"
These are the words of Lord Clarke sitting in the Supreme Court in the case of RTS Flexible Systems v Molkerei Muller GmbH back in 2010. They are certainly worth repeating. In that case, the parties did not heed the advice and work commenced long before a contract was signed. Unsurprisingly, when it came to being paid for the work, the claimant did not find that as easy as expected because the defendant said that no contract had been signed. Ultimately, the claimant was successful because the court took the view that the parties had effectively reached agreement and waived the need for a signed contract. But it took them going to the Supreme Court to get that result, which is a very expensive way of vindicating your rights to payment. So, before you start work for anyone, get them to put pen to paper.
Things may still go wrong
That seems self-evident but, when they do, speak to your lawyer. Litigators spend a lot of their time in court but they also spend a lot of time out of court helping people resolve disputes amicably and in a way that ensures future business from your contractual partners. If you have breached your contract (perhaps accidentally or without realising) or if the other side are in breach speak to a lawyer about your options. Doing nothing isn't always an option because you might prejudice yourself and bar yourself from taking any further action if you just sit on your hands. Equally, tearing the contract up and walking away isn't always an option either. Rather, your rights and obligations on breach of contract are determined by the contract and by the governing law. Knowing your rights as soon as things go wrong makes it much easier to put things right again.
You may not be able to sort it out as easily as hoped
If not, you do not need to rush off into court. There are other options open to you. The contract may provide for arbitration (although that can be more costly and time-consuming than court action) in which case you may need to follow it. Or, another form of dispute resolution such as mediation might be capable of resolving matters. All our litigators are trained in alternative dispute resolution and David Hossack is an accredited mediator. Mediation is quicker than court action, it happens on your terms (agreed with the other side) and it has the advantage of being confidential if that is what the parties agree. Mediation will almost always involve compromise by both sides but can be a crucial way of maintaining a relationship with a party with whom you are in dispute.
If all else fails, litigate
Litigation is, as I said at the start of this article, sometimes absolutely essential. It is, of course, a risk and there are no guarantees in litigation. If you do need to litigate then you need certainty and clarity from your lawyer about everything: - the legal advice given about your prospects of winning the case; the proposed strategy for running the litigation; the costs involved in doing so and the time that it may take for the court process to run its course. Litigation is not cheap even if you win. But with the wrong lawyer you can spend a lot of money and not achieve very much. Our commercial litigators have experience advising clients in a wide-variety of contractual disputes in the Scottish courts and with their guidance, you will stand the best possible chance of success.