I'm Going to Sue You!
By Pete Ekstrom
Learn how to avoid a contractual dispute or disagreement rather than having
to rely upon the threat of a lawsuit as a remedy.
If you are in business, then it's 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 itís 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
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
The number one problem you'll have with any breach of contract is your
emotions. Emotions can get in the way of sound judgment, 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
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 are contingent upon
your collecting a judgment 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
upfront 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 runaway legal expenses and aggravation later on.
Peter Ekstrom provides sales advice and training through The
DealBuilder he also writes the
GoldCall blog. Peter can
be reached at 516-541-8160