In these unprecedented times, it is understandable that disputes may emerge between parties doing their best to navigate uncharted territory.
This guidance note offers some practical steps that you can take to ensure you are well prepared when a dispute arises. They could help you to build business resilience in tricky times.
Collate the relevant legal documentation and any correspondence that goes to the heart of the dispute at hand. Share this documentation with your lawyers so that they can consider your legal rights and assess the strength of your position. Your lawyers will then be in a position to advise you of your potential options. This advice should not simply deal with your legal rights but should take account of your wider strategic goals. For example, while you may be able to exercise an immediate termination right under a particular contract, such action may not be appropriate in circumstances where you desire a continuing relationship with the other party. In these circumstances, a form of conditional forbearance or contractual variation may be a suitable compromise.
Where you believe that a particular legal right has become exercisable, take steps to preserve this right otherwise you risk losing it. For instance, while weighing up your options, consider sending a letter to the other party to reserve your rights. However, keep in mind that even this could be nullified by subsequent conduct including contradictory statements or a prolonged period of silence/inaction. Where you continue to negotiate with the other party for an extended period of time, you may wish to expressly reserve your rights periodically.
Gather and preserve all documents and communications created before litigation was anticipated. Once litigation is anticipated, where possible, avoid generating documents and communications that are not privileged (see below). It is important that you maintain detailed records of your decision-making process so that you can robustly defend these decisions once litigation is commenced.
You may be required to disclose all relevant communications (this extends to things like voicemail, text and WhatsApp messages not just letters and emails) together with all relevant hard and electronic copy documents to the other party in the event of litigation. Certain documents and communications may be privileged and will not be disclosable. Seek legal advice on how best to protect yourself in this regard and note that (1) copying in-house or external lawyers into your communications does not of itself guarantee that such communications will be privileged and (2) labelling something confidential will not automatically prevent it from being disclosed in litigation.
When serving a notice to terminate a contract or to invoke another contractual provision (such as force majeure) ensure that you comply with any notice provisions in the contract, which may include terms as to time limits and the format of the notices. Strict compliance with these notice provisions is essential as non-compliance can prejudice an otherwise strong claim. Also consider whether your contract includes provisions prescribing the steps to be taken in the event of a dispute emerging between the parties.
- Do you have insurance covering the losses suffered?
- Are you able to obtain services elsewhere, find new suppliers or customers to minimise your losses? The question of whether you have taken reasonable steps to mitigate your losses may be taken into account by a court.
If you would like any further information on any of the above, or would like to discuss your particular circumstances and how Knights could help, please contact a member of our Dispute Resolution team.