There is no substitute for speaking to your usual Charles Russell contact and taking specialist legal advice. However, there are some issues that arise regularly relating to commercial disputes and the following FAQ may assist in identifying whether you need specialist assistance with your problem from the Commercial Dispute Resolution team. If you need more details please either speak to your usual Charles Russell contact or ask to speak to John Sykes.

Is an Oral contract worth the paper it's written on?

It is a common misconception that oral agreements are somehow less binding than written ones. They are not. It is obviously much easier to establish the terms of a written agreement - they appear on paper - and the parties are far less likely to forget what has been agreed.Provided that you have agreed the main terms, what each of you are to provide and the time for performance, price and what will happen if something goes wrong, then there should be no difficulty in establishing that a contract has been made.

There is a possibility that memories may have faded over time and that the other side will have a different recollection to you. The conduct of each party may, therefore, also be relevant to show what each thought the terms were. If there is a dispute over what the terms of the agreement were, a Court will want to see evidence from those individuals who reached the agreement so that it can assess which is more likely to be correct.

I've been asked to give a Witness Statement - what should I do?

We suggest that unless you feel very strongly you should at least discuss the situation with the Solicitor who has contacted you. Provided that it is not a Criminal matter, you will generally have a choice whether or not to co-operate with the party who has asked you to give evidence.
If you choose not to co-operate, the Court can issue a Witness Summons (which used to be called a Subpoena) to require you to come to Court and give evidence or produce documents. These are generally only sought where your evidence is essential. However, some people ask to have Witness Summonses made to avoid difficulties with their employers in getting time off to attend Court. It is a contempt of Court to fail to obey a Witness Summons. It is also an offence to lie in Court or in your Witness Statement.
For further information and general tips regarding the giving of evidence please see our Guide for Witnesses.

My Debtor can't pay - what can I do?

If you are a secured creditor, call in your security. Otherwise, check your contractual terms as they may include retention of title provisions giving you the right to demand the return of goods delivered. These clauses are rarely effective but can assist.

Otherwise, if a Debtor truly cannot pay (as opposed to won't pay) then you should try to reach some form of agreement for staged payments, with commercial interest. Any agreement should expressly state that it will come to an end and the entire amount will be immediately payable if bankruptcy or other insolvency procedures are begun. If no agreement can be reached, consider whether you wish to activate insolvency procedures yourself. This is the last resort where a Debtor truly can't pay.

My Debtor won't pay - what can I do?

The first issue to consider is why won't your Debtor pay? Has he a legitimate complaint about your performance? It is likely to prove cheaper for you to try to resolve a legitimate dispute through negotiation at very early stages than to escalate into formal dispute resolution processes.

If your approaches fail, consider mediation - particularly if you have an ongoing commercial relationship with the Debtor which you would like to preserve. You will probably need legal advice to progress this avenue.
If the Debtor has not raised any complaints but simply will not pay, consider serving a statutory demand. This is the first step in the insolvency procedures and often brings a recalcitrant Debtor (who can but will not pay) to heel.
If the debt is less than £5,000, consider making a claim in the small claims track. Your local County Court will be able to help you. The process is set up for individuals or companies to bring claims without legal representation. The process is quick and will probably only involve one "fact finding" style hearing at which a District Judge will resolve the matter. You should expect a degree of "rough justice" in that the emphasis will be on resolving the dispute rather than on legal niceties. The judgment given has exactly the same force as any other Court Order and can be enforced through the Court Bailiffs.

If the debt is between £5,000 and £15,000, you can consider bringing a claim in the County Court. The case will be entered into the fast-track and will come to trial quickly. It would be normal for you to be legally represented and the process will include the exchange of witness statements and a hearing in Court where you may need to give evidence and may be cross-examined. However, you should still expect a degree of "rough justice" from the process. If the Debtor does not have a defence with a real prospect of success, does not put forward a defence or simply denies the claim, it should be possible to obtain an early judgment.
If the dispute is over £50,000, or very complex, it will be dealt with in the High Court. The case will be entered into the multi-track. It will not come to trial quickly unless the Court is convinced that it is urgent. The normal duration of a multi-track claim is 18-24 months. It would be difficult to deal with this type of dispute without legal representation. Again, if the Debtor does not have a defence with a real prospect of success, does not put forward a defence or simply denies the claim, it should be possible to obtain an early judgment.

Disputes which fall between £15,000 and £50,000 will be allocated between fast-track and multi-track depending on complexity.

My Supplier hasn't performed as contracted - what can I do?

Certain obligations in a contract will be "fundamental" or "repudiatory". This means that they go to the heart of the contract and a default will entitle the innocent party to terminate the agreement and claim damages or to treat the agreement as if it had never been made and claim damages. Others will be less important and simply entitle the innocent party to claim damages whilst the contract continues.
A repudiatory breach would normally include one party making no performance of its contractual obligations at all. Such a breach would entitle the innocent party to decide whether to treat the contract as at an end, to claim repayment of any sums expended or paid under it and to claim damages for the loss of the bargain if it is not possible to reach similar terms with a third party.

If some performance of the contractual obligations has been made before the repudiatory breach, the rights to each party that have already accrued will remain unaffected.
If the innocent party delays in taking action to terminate the agreement for any length of time then it may be found to have waived its rights to terminate. This will be the case if the party in default can show that it believed that the contract would not be terminated and acted on that by (for example) continuing to perform its obligations under it.
There may be contractual terms in your agreement that entitle you to terminate for "material" breach. The agreement may define what a material breach is, and may include non-payment.

There also may be contractual terms, such as liquidated damages provisions for certain types of breach (where a genuine pre-estimate of loss has been made at the time that the contract was made) or penalty clauses. It is important to differentiate between these. A penalty clause is not a genuine pre-estimate of loss and will not be upheld by the English Courts.

My Supplier is late in performance - what can I do?

Time is not usually a fundamental obligation entitling the innocent party to terminate the contract. If it is, the contract will normally use words like "time is of the essence" or use other words to the effect that time is essential. You should check your agreement for these words. However, the absence of time of the essence wording is not decisive. If the type of contract is such that time is obviously material, for example the goods are perishable, then this will be implied by the Court.

You can make time of the essence by a notice to the defaulting supplier stating that it is so and giving a reasonable time by which performance is to be given. If the supplier still does not perform (and there are no other factors) then you would be entitled to terminate the contract for material breach and claim damages.

I have just received a Statutory Demand - what is it and what should I do with it?

Statutory Demands are the first step in bankruptcy or insolvency proceedings. You have 21 days in which to pay the debt, if you agree it is due, or 18 days to apply to set aside the demand if you have a real dispute over it. If the amount on the demand is wrong but you still owe over £750, the demand will still be valid evidence for the purpose of bankruptcy or insolvency procedures. Whatever you do, do not ignore it.

I have just received a Court claim form - what should I do with it?

You have 14 days in which to respond to the Court. There should be a response pack with the claim form for you to complete and return to the Court. You can either acknowledge service or defend within the 14 day period. If you need more time to defend, you should acknowledge service. You will then have a further 14 days (making 28 days in all) in which to defend. If you do not respond to the Court, Judgment will be entered against you. Do not ignore the claim form.

If you admit the claim, consider getting in touch with the solicitors named on the claim form. You may be able to reach an agreement without Judgment being entered against you.

If the claim is for less than £5,000 you may be able to deal with it yourself as it will be allocated to the small claims track where the procedures are designed for individuals and companies to deal with the claim without solicitors. Otherwise, we recommend that you take legal advice as unless the matter is very simple it is likely that you will need help.

I've decided that I need help with this dispute - how much will the legal fees be?

We recommend that you ask for a detailed estimate of fees at the beginning of the dispute. Whilst it is difficult to give estimates before all the issues are known, it is usually possible to give estimates with some certainty and we will then normally be able to discuss and agree fees with you on a stage by stage basis. In certain matters, we may agree to capped or fixed fees. Please ask the partner involved if you wish to discuss this as a possibility.

If you do not ask for a detailed estimate, we will give you general estimates on a stage by stage basis as your matter progresses. We will normally start with the investigation of the dispute and initial correspondence with the other side to identify the issues and advise on the most appropriate process for resolution of the particular dispute.

Our charges are based on the hourly rate and time spent of the lawyer you choose to represent you. We work in partner-led teams and therefore whilst you may have an assistant solicitor or associate looking after your matter on a day to day basis, the supervising partner will be involved reviewing the work done and in the decision making and tactical processes. If the matter is complex, or a large amount is at stake, we may recommend that a partner deal with the matter on a day to day basis. The difference in hourly rates between partner and assistant depend on the experience of the assistant but as a rule of thumb an assistant's rates are approximately ¾ of the partner's rates. You can ask for a partner to be more "hands on" with a smaller matter - but this may prove more expensive.
In addition to solicitors' fees, you may also have to pay Experts' and Barristers' fees. Normally, Barristers are involved at the early stages of the matter in preparing the Court documents, at the stage of serving witness statements and at trial.

If you ask, and if, following investigation, your case is strong enough, we may agree to take the matter on a conditional fee agreement. This means that if we do not succeed, we will make no charge to you. However, we will charge for the costs of investigating the claim. Even though the premiums are quite high, we strongly recommend that you take out insurance to cover the other side's costs in the event that you lose. Whilst you may need to take out a loan to cover this, if you win, the premium will normally be included in the costs that the other side have to pay, if you lose, the premium will normally be repaid to you as part of the insurance claim. Experts' and Barristers' fees also need to be taken into account.

Won't the other side have to pay my legal fees?

Only if you win, and only to the extent that the Court thinks reasonable. It is important to bear in mind that the normal proportion of fees that you can expect to recover from the other side is about 70%. This may have bearing on how you approach the dispute as in a large claim the unrecoverable proportion of your legal fees may be a significant amount. There is also no guarantee that the other side will have assets to pay their contribution.

If you have decided to use Negotiation or Mediation to resolve your dispute then the extent to which the other side will have to pay your legal fees will depend on what is agreed between the parties.