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When you run a business, it is possible that, at some stage, you will eventually be part of a commercial dispute. This is where you and other companies or customers disagree on your business activity together, such as a claim for faulty goods. If you do run into a commercial dispute, it is essential to try to resolve it as soon as possible. This is usually cheaper and less time-consuming than court litigation, which is a last resort. For example, you may attempt alternative dispute proceedings such as mediation. However, this may not always work, and you could find the other party pays court fees and takes legal action, issuing you with a small claims court claim. This article will explain what to do if your business receives a small claims court claim form.
What is a Small Claims Court Claim?
A small claims court claim is suitable for the majority of consumer contractual problems. If you, as a business, receive a court claim for a commercial dispute, it is possible it will be from one with one of your customers.
As a small claim, the maximum it can cover in England and Wales is £10,000 and £5,000 for Scotland or Northern Ireland. However, if the case is very complex, despite being within the claims limit, it may not be suitable for the small claims court.
This guide outlines how to resolve commercial disputes.
What Do I Do if My Business Receives a Small Claims Court Claim?
If your business is in the unfortunate position of receiving a small claims court claim, it will be from a person or company who has a commercial dispute with you. This is because, before they decide to go to court, they will already have notified you and tried to resolve the commercial disagreement. This is necessary as part of the Practice Direction on Pre-Action Conduct for small claims. You will know that the commercial dispute has become a small claims court claim because you will receive a small claims form with the:
- name of the person claiming, who is the claimant;
- reason for their small court claim; and
- amount of the claim.
Send a Defence
When your business receives a small claims court claim, you must respond to it. You usually must reply to the claimant within 14 days, but you will be told if this differs. It is important that you respond in time, or you could end up with a county court judgment.
You can respond to a small claims court claim online or by post.
If you agree that you owe the amount on the small claims court claim, you should accept it. Alternatively, if you agree you owe part of the amount on the claim, you should accept that part of the claim.
If you believe that the other party owes you money, you may also bring a counterclaim against them.
Complete a Directions Questionnaire
Once you file your defence, if you do not accept the small claims court claim, you will receive a notice of proposed allocation from the small claims court. This will tell you what:
- documents you need to produce; and
- you must send to the other party.
When you receive a small claims court claim, you should take legal advice by finding a commercial disputes lawyer. However, if you do not have legal representation and are, therefore, a litigant in person, you will receive a directions questionnaire. You must serve the completed questionnaire on all parties to the dispute.
Court Litigation or Mediation
At this point in the small claims court process, the other party may choose to use mediation to try to resolve the commercial dispute with you. This is a form of alternative dispute resolution where you and the other party use an independent mediator to facilitate you both coming to a resolution. However, the other party may still decide to continue with court litigation. This is likely where you offer to pay the debt but not in a manner that they accept.
If the small claims court claim continues to court proceedings, it will occur in either a:
- judge’s room; or
- county court courtroom.
You will need to serve your evidence on the parties 14 days before the court hearing, and the other party must do the same.
If you do continue with the court proceedings, the judge will give you a decision on the hearing date and a copy later by post.
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Key Takeaways
You may receive a small claims court claim for your business if you are involved in a commercial dispute. This can occur after you and the other party have tried to resolve the business disagreement informally or through alternative dispute resolution methods such as mediation. The other party will send you a small claims court form detailing the:
- nature of the dispute; and
- amount that they claim you owe.
When you receive a small claims court claim, you will normally need to respond within 14 days. To dispute the claim or where you do not accept the full claim, you must submit a defence detailing why. You will then receive a notice of proposed allocation from the court telling you what documents to produce. If you decide to proceed to a hearing, both you and the other party must serve evidence 14 days before the court date. If you need help understanding what to do if your business receives a small claims court claim, LegalVision’s experienced disputes and litigation lawyers 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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