Deciding whether you need to take legal action
What you need to know before you make a claim
Before you take the decision to start legal proceedings, you need to answer three fundamental - and fairly obvious - questions:
- Do I have a good case?
- Am I comfortable with the idea of compromising in order to reach a settlement?
- Assuming legal action is my best or only available option, will I actually be able to obtain compensation from the other side?
If the answer to any of these questions is no, you probably won't want to start legal proceedings.
Do I have a good case?
To figure out whether you have a good case, solicitors will be examining your case and, in particular the law that supports your claim (which is known as the "cause of action" in legal terms). The cause of action will specify a list of legally required elements for the claim to be successful. It follows that as long as you know what the elements are for your type of claim, it's usually fairly easy to determine whether you have a good case. For example, a claim against a contractor for doing substandard construction work would be for breach of contract (because the contractor agreed either orally or in writing to do the job properly). The legal elements for this type of claim are as follows:
- Contract formation: You must show that you have a legally binding contract with the other side. 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 agreement. Assuming you have made payments when required and that you have generally cooperated with the other side, 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 (that they are in "breach of contract"). This is usually the heart of the matter - you'll need to prove that the contractor failed to do agreed work or did work of unacceptably low standard
- Damages: You must show that you suffered a loss as a result of the other party's breach of contract. Assuming the work must now be redone or finished, this element should also be relatively straightforward to prove
The legal elements for different types of claims are different.
Is there an alternative?
Even if you think you have a good case, don't rush when considering whether to commence legal action. Firstly, you need to think about possible ways you might be able to settle your dispute out of court. You could try to talk directly with the other side and negotiate a mutually beneficial compromise. Or you could think about hiring a mediator - a (neutral) third person who can help you and the other side to think about your goals and options in order to try to find a solution that works for everyone. Also, and especially if your contract provides for this, you might be able to submit your dispute to arbitration proceedings (which is cheaper and quicker that going to court).
Will I be able to obtain a payout from the other side?
Your answer to this question is incredibly important. There is no point in you spending your time and money going to court to obtain a judgment against a party who has no money or any other assets. Whilst most reputable businesses and individuals will pay you what they owe, if they don't have it, they simply won't be able to pay you! Unfortunately, the enforcement of court judgements isn't always a straightforward matter, and whilst you can apply for the court's assistance with this, it is up to you to make sure that the other side has the necessary assets to be able to pay you.
Normally, if someone has a job or owns valuable property - such as land or investments - collecting your money is not too difficult. There are different ways in which you can enforce your judgment through the courts which vary from the physical seizure of assets with the help of a bailiff to obtaining a court order requiring the other side's employer to make regular payments to you.
However, you must always carefully consider before commencing legal proceedings how the other side will be able to pay. If there is any doubt about this you should think twice about suing them. A judgement will be of no value to you if the business you are taking legal action against goes insolvent, the individual goes bankrupt or even disappears completely!
For more information on starting a legal dispute, we have an article on the ten things you should think about.