Archive for February, 2013

I’m Going to Sue You!

February 1, 2013

scales-of-justice-gavel_4If you are in business, then it’s highly likely that you will work with contracts, agreements, purchase orders and the like. On some occasions these contracts will be broken by your customer, and thoughts of filing a lawsuit come to mind.

Long ago I learned the hard way that any contract that is uncertain in its terms, like how much something costs, or the required deadline for delivery, can open a ‘can of worms’, and bring a host of unexpected problems later on.
When dealing with contracts its all about the details, details, and more details. That’s why any contract you enter into with clients needs to be in WRITING. Can I make myself any clearer?

However, just because you have something in writing doesn’t necessarily mean that you will prevail in the event you have to sue your customer to collect monies owed to you. Having a written contract only gives you a greater legal standing in making your case to a judge, or an opposing attorney. Oral agreements are binding as well, but it’s always better to have something in writing.

OK, suppose you have a written contract, and your client decides to breach that contract for whatever reason. What’s next?
For starters, I would advise that you do all that you can to pursue a mutual and reasonable agreement with your customer, and leave contacting a lawyer about filing a lawsuit as a last resort. Don’t threaten your customer with a lawsuit either. Let me tell you why…
The number one problem you’ll have with any breach of contract is your emotions. Emotions can get in the way of sound judgement, and that can cost you plenty. Lawyers feed off your emotions, and that makes it easier for them to tack on more fees for their services. (No, I am not going to crack any cheap lawyer jokes here)
Also, threatening your customer with a lawsuit is only going to make them angry, and cause them to dig in and mount a defense to your claim. When two people hate each other, how can there be any resolution?

Let’s face it, when someone screws you out of your money you are angry, and that’s putting it mildly. Thoughts of rage, and directing visceral in your customers direction is all you think about, all the time. You want revenge – You want justice! So… you go looking for a lawyer thinking that having an ally on your side will increase your chances of getting justice. Well, that’s a BIG maybe!

Justice costs money. Contract lawyers don’t work for free arguing breach of contract matters. Don’t be confused by personal injury cases where lawyers tend to work on a contingency basis where lawyers getting paid is contingent upon your collecting a judgement award.

Contract lawyers work it the opposite way, they want thousands of dollars up front, and an hourly rate ongoing for any additional faxing & copying they have to do. If your lawyer cannot settle out of court, then there are more legal fees required to litigate the case in court. In other words, suing someone to collect past due invoices, or outright breach of contract can be very expensive for you. This is why you need to make sure, as best you can, that ALL of the terms and conditions are outlined explicitly in your contracts so that there is NO DOUBT to your customer as to what they are agreeing to, and what you can expect to receive under the terms of that contract.
As sure as the sun rises every day, any ambiguity or loose wording you include in your contracts is going to come back to haunt you later on. You can count on it!

My advice to you is to do everything you possibly can to create clear and concise agreements with your customers up front. While there’s no guarantee that they won’t default on the agreement, I’ve found that when two parties have an up front understanding as to what the contract requires of both parties, that there is less of a possibility that either party will default.

In closing, don’t create half-baked contracts with your customers, and think that some lawyer is going to bail you out, and collect for you later on. Take care of all the business parameters in your contract up front, and you’ll spare yourself the run away legal expenses and aggravation later on.