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Most businesses will enter into commercial contracts during their company’s business activity. Contracts are legally binding agreements detailing the terms and conditions of business activity between you and the other party. They are beneficial as they can clarify the business arrangement and help the business relationship. However, sometimes, things can go wrong, and a contractual dispute can arise. This type of commercial dispute can include, for example, a breach of contract or a dispute over the meaning of contractual terms. If you fall into a contractual dispute, you must resolve it immediately, such as through alternative dispute resolution, to keep your business activity moving. One way is through court proceedings and litigation, for which you should take legal advice. This article will explain what to consider when deciding on commercial litigation for your contractual dispute.
What is Litigation for my Contractual Dispute?
Litigation for your contractual dispute is where you decide to take the other party to court. It is, therefore, formal court proceedings. You issue a claim against the other contracting party for their role in the commercial dispute. Before doing so, you must follow the Pre-Action Protocol related to your dispute. Failure to do so could cause costs for you at the litigation stage. Pre-Action Protocols help you resolve the matter out of court.
This fact sheet outlines how your business can manage a dispute.
When you litigate a contractual dispute, the court will issue instructions regarding actions and deadlines. This may ultimately lead to a court trial and hearing.
What Should I Consider When Deciding Upon Commercial Litigation for My Contractual Dispute?
If you are considering commercial litigation to resolve your commercial dispute, there are some points to consider beforehand and as part of this. We explain these below to help you decide if litigation is the correct dispute resolution method for your contractual commercial dispute.
Is There Another Way to Resolve My Contractual Dispute?
Before deciding upon commercial litigation for your commercial dispute, the first thing to consider is whether there is another way to resolve it. Commercial litigation should always be the last resort for any contractual dispute. It can be costly in terms of time and resources and damage your reputation.
For example, you may be able to resolve your contractual dispute through:
- negotiation;
- mediation;
- early neutral evaluation (ENA);
- arbitration;
- expert determination; or
- adjudication.
Costs
As noted earlier, court proceedings can be costly, so this is a consideration if you decide on litigation for your contractual dispute. Costs include legal fees and the time taken from your business activity.
The winning party in a commercial dispute will get most of their money back as the losing party has to pay for this. Therefore, if your argument is weak, court litigation could be costly.
Limitation Period
If you choose litigation to resolve your commercial dispute after considering the alternatives, consider the limitation period. The limitation period in commercial court litigation is the timeframe when you can bring a claim. You should note that if you are concerned you are nearing the end of your limitation period, you still have to follow the legal Pre-Action Protocol for your claim before you can bring a claim.
The legal limitation period for a breach of contract is usually six years. However, you and the other party could have agreed differently. If so, this will be reflected in your contract.
However, where you execute a contract as a deed, you have a 12-year timeframe to make a claim.
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Key Takeaways
If your business is part of a contractual dispute, you may consider court litigation to resolve it. This is where you make a claim to take the other contracting party to court to have court proceedings to decide on the commercial dispute. If so, you need to consider specific points beforehand. The first is whether there is an alternative way to resolve the contractual dispute, as court litigation is costly. For example, mediation or arbitration may resolve it.
Another factor to consider is the costs of court litigation for a contractual dispute. In addition to your time, there are legal fees to pay. When considering costs, you must consider the other party’s financial position to see if court proceedings are worthwhile. It would also help if you consider the strength of your argument.
If you decide upon court litigation for your contractual dispute, the losing party pays the other party’s costs. You should also consider the limitation period. This is the legal timeframe in which you can bring a claim for a contractual dispute through court proceedings.
If you need help understanding what to consider when deciding upon commercial litigation for your contractual dispute in the UK, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.
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