Contract litigation can make or break your business, regardless of your size.
But there are ways to mitigate the risks even before they arise with experienced legal guidance and effective contract practices. In the event that you face a contract lawsuit, there are steps you can take that will improve your chances of a positive outcome and protect your business from unnecessary costs.
Establishing a Preemptive Approach
The best way to avoid a contract dispute is to plan for the possibility of a dispute. Although avoiding contract litigation isn’t always possible, utilizing some simple practices and rules of thumb can help you manage the risks.
No Handshake Deals
Oftentimes parties spend weeks negotiating a contract, but when it comes to finalizing it, they do so with a quick email, form, or even a handshake that does not accurately document the terms to which they have agreed. While this may seem to dull the magic of a new relationship, savvy business people recognize and appreciate the importance of a written document. A written show document shows the other party that you mean business.
Use Accurate & Effective Terms
Make sure your contract includes accurate and specific details of what you have agreed to, particularly on issues like performance and timelines. You should also include clauses to address ancillary issues like termination and what happens when outside forces prevent a party from performing. When it comes to signing a document, make sure you read it and confirm its accuracy, especially when the other party provides it. An attorney can help ensure that the contract is accurate and enforceable. For more recommendations on contract preparation, see our blog post, The 5 Habits of Highly Effective Contracts.
Include Dispute Resolution Clauses
The contract should include a procedure for addressing issues when they arise. These often begin with one party providing written notice and giving the other party a set time period to correct or cure their breach. Then, if that does not work, the contract may then require alternative dispute resolution procedures like mediation and arbitration that keep the dispute private and out of the courts. These provisions will not eliminate the chance of a lawsuit, but they will create clear expectations for disagreements and reduce frivolous lawsuits.
Document, Document, Document
As the business relationship progresses, keep documentation of each parties’ performance, failures to perform, and changes to your agreement. Establishing and maintaining documentation procedures and policies can be your saving grace during the litigation process. Good documentation can stop a dispute in its tracks, or provide the court with the evidence it needs to make a conclusion in your favor. Typically, whoever has the ability to provide the most robust documentary evidence will be the one to have the best case in a dispute. By meticulously documenting the entire relationship, you provide your attorney with valuable evidence to support your defense, undermine the opposing party’s claims, and strengthen your position during negotiations or trial.
Involving Your Attorney
Even with your best preemptive efforts, litigation can arise. A lawsuit can feel like a personal experience when a contractual relationship has broken down. But more often than not, businesses simply use lawsuits as a tool to push a dispute towards resolution in their favor. A thoughtful and strategic response is key to your success. An experienced litigation attorney can assess the situation from a neutral perspective, provide you with a comprehensive understanding of your obligations and vulnerabilities, and aggressively advocate for your rights and defenses.
There’s a very short time frame to act after being notified of the complaint. You will need to prepare written responses and ensure that all relevant evidence is preserved. You should contact an attorney as soon as possible to avoid fatal delays and give your attorney sufficient time to prepare an effective strategy and response.
Knowing What to Expect
For the uninitiated, the litigation process can seem lengthy, complex, and expensive, but having a clear understanding of the stages involved can help you prepare effectively. Your attorney will guide you through the process and recommend appropriate courses of action.
Pleadings: The initial phase involves the filing of the complaint by the plaintiff and the subsequent filing of the defendant’s answer or responsive pleading. Generally, the defendant will have 30 days to respond. Otherwise, the defendant will go into what is known as default, which can have dire consequences. Default can cripple your defense, which is why it’s so important to notify your attorney immediately.
Discovery: This stage involves gathering evidence and information through various methods such as written interrogatories, requests for documents, depositions, and subpoenas. The more documentation, the better. Investing the time to meticulously search your records and correspondence for relevant materials will ensure that you can put forth the best defense possible.
Motions: Both parties may file motions to request specific actions from the court, such as a motion to dismiss, a motion for summary judgment, or a motion to compel discovery.
Negotiation and Settlement: The vast majority of lawsuits end in a settlement. Your attorney will advise on whether negotiations for a mutually agreeable resolution can be reached. However, unfortunately, sometimes negotiations are impossible, so it’s important to have an attorney who will be forthright about your options and look out for your best interests.
Trial: If the parties cannot reach a settlement, the case proceeds to trial, where both parties present their arguments, evidence, and witnesses before a judge or jury who decides the resolution..
Facing a contract dispute lawsuit can be daunting, but with the right legal guidance and a proactive approach, you can effectively defend your interests. Our experienced legal team at Baker Jenner will use diligent preparation and strategic advocacy, so you can navigate the complexities of a contract dispute lawsuit and strive for a favorable outcome. To schedule a consultation, call (404) 400-5955 contact us today.
Baker Jenner LLLP
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