Should you start a legal claim?

27 April 2022

Should you start a legal claim when there is a breach of a contract? This is a question I am commonly asked as a business and employment lawyer.

Before considering making a legal claim, you need to be sure that what you want enforced is a right that you have ownership of, such as:

• An infringement of your trademark or copyright.
• An Intellectual Property breach that you have the right to enforce.
• Failing to receive full payment for services or goods already delivered.
• Failing to receive the goods or services you have made a payment for.

Here are three tips to help you make that decision. Want the short version? View the video below. 

Tip 1 — Consider your why

If someone breaches a deed or contract, you may want to start legal proceedings to recover your losses or damages.

Before making a decision, consider your why. Do you want to start a legal claim for a constructive reason? For example, to recover damages. Or is it a destructive one? Are you hoping to achieve something that will make your life better? Or are you pursuing a claim to make someone else's life worse? A vengeful reason.

It is important that your reason for taking legal action is sound. Avoid letting a need for retribution, a sense of injustice or anger guide you.

Tip 2 — What is your current situation?

Consider your current situation. Taking legal action costs money and time. Are you travelling? Do you have children? Do you have financial pressures? Do you have a mortgage?

While these factors won't stop you from pursuing a legal claim. They are important to consider because they will impact how much time and the amount of resources you can dedicate towards a legal claim. It will also be difficult to predict how long it will take to get a resolution.

Tip 3 — What do you want to achieve?

What is the outcome that you are hoping to achieve? In other words, what is the point of starting a legal claim? Never start legal action if you do not know the outcome you are after.

Be open with your lawyer about what you want so your lawyer can give you the best advice and let you how realistic that outcome is to achieve. Are you seeking a monetary outcome? Or a non-monetary outcome, such as an apology or acknowledgement? If you are not sure what you want to accomplish by taking legal action, talk about it with your lawyer. They will discuss the whole process with you and let you know the possible results. This will help you make the best decision.

Limitation periods

You want to consider how much time you have to make a claim. For example, if your claim is about a contract, you have 6 years from the date when the cause of action arises (Sections 14A and 14(1)(a), Limitation Act 1969). But if the cause of action was founded on a deed, you have 12 years (Section 16, Limitation Act 1969). This applies to all Australian states except South Australia where it is 15 years.

Summary

To sum up, consider your why, your situation and the outcome you want to achieve.

Also, consider:

• What legal action will cost you not just financially but also the reputation of your business.
• What alternatives you have to legal action, such as mediation.
• The length of time it will take for a resolution.
• What the worst-case scenario could be and whether you can live with that.

It is important that you speak to a business lawyer who understands the system and your needs. They have the experience and understanding to give you good advice, so it is important you are open with them and have the proof to back your claims.

Do you have any questions? Leave them below or contact me directly for a free 15-minute consultation.

I wish you all the best no matter the decision you make.