If you are considering court action, you need to answer three fundamental questions before deciding whether it’s worthwhile to bring court proceedings:

  • Do i have a good case?
  • Am I comfortable with the idea of a compromise settlement or going to mediation?
  • Assuming court proceedings is my best or only option, can I collect if I win?

If the answer to any of these questions is no it may well be that you should think again .

Do I have a good case?

To work out whether you have a good case, you should understand that the law breaks a claim into legally required elements, all of which must be proved.

For example, an action against a building contractor for doing substandard work will be for breach of contract (because the contractor agreed either expressly or impliedly to do the job properly). The legal elements for this type of action will be:

  • Contract formation. You must show that you have a legally binding contract with the contractor. If you have a written agreement, this element is especially easy to prove. Without a written contract, you will have to show that you had an enforceable oral (spoken) contract, or that an enforceable contract can be implied from the circumstances of your situation.
  • Performance. You must prove that you did what was required of you under the terms of the contract. Assuming you have made agreed-on payments and otherwise cooperated, you should have no problem with this element.
  • Breach. You must show that the party you plan to sue failed to meet his or her contractual obligations (‘breach of contract’ in legalese). This is usually the heart of the case – you’ll need to prove that the contractor failed to do the agreed work or that the work was not of a reasonable quality.
  • Damages. You must show that you suffered an economic loss as a result of the other party’s breach of contract. Assuming the work must be redone or finished, this element should also be relatively straightforward to prove.

Is there an alternative?

Even if you decide you have a good case, don’t rush down to the court. First, think about ways to settle your dispute out of court. You can talk directly with your opponent and try to negotiate a mutually beneficial compromise. Or you can hire a mediator – a neutral third person who will help you and your opponent evaluate your goals and options in order to find a solution that works for everyone. Also, and especially if your contract provides for it, you may be able to submit your dispute to binding arbitration.

Can I collect if I win?

Your answer to this third question is incredibly important. There is no point in getting a court judgment against a ‘man or company of straw’. While most reputable businesses and individuals will pay you what they owe, if they don’t have it, they can’t pay you. If your opponent tries to stiff you, you may be in for a struggle. Unfortunately, the court won’t collect your money for you or even provide much help; it will be up to you to identify the assets you can grab.

Normally, if an individual is working or owns valuable property – such as land or investments – collection is not too difficult. You can issue a warrant of execution or obtain a charging order over property or perhaps obtain an attachment of earnings order. For a successful business, especially one that receives cash directly from customers, you can obtain a third party charging order. However, if you can’t identify any collection source – for example, if you’re dealing with an unlicensed contractor of highly doubtful solvency – think twice before suing. A judgment will be of no value to you if the business or individual is insolvent, goes bankrupt or disappears.

We have an Ebook on settling out of court which you can download here