Letter before action
Yes, you should always consider alternatives before commencing any legal action. The court also has power to order the use of ADR: A collective description of methods of resolving disputes otherwise than through the normal trial process, which include mediation or arbitration. – such as A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. – before a case actually gets to a hearing.
Even if you go on to win your case, the court can order you to pay some of the other side's Fees, charges and expenses paid to lawyers for their services., or reduce the amount of costs that they have to pay you, if you fail to at least try to resolve your dispute between yourselves. Further, going to court is generally the most expensive, time-consuming and stressful method of The process of resolving a dispute between parties, whether through formal processes such as litigation or arbitration, or more collaborative processes such as mediation.. It is adversarial and will likely end whatever business relationship you had with the other side. You should also bear in mind that most court hearings are held in public so commercially sensitive documents can be read out in court.
Note that your contract may specify what you have to do in the event of a dispute, in which case you must usually follow what it says.
For guidance on how you can resolve a dispute without going to court, see Q&A 2
There are a number of The process of resolving a dispute between parties, whether through formal processes such as litigation or arbitration, or more collaborative processes such as mediation. options that you can consider, up to and including legal action:
informal correspondence and negotiation. If this does not work, you can consider sending a formal 'A final warning letter before legal action is taken. Also known as a letter before claim.' threatening to sue;
arrange a meeting to try and work out the situation;
use any ADR: A collective description of methods of resolving disputes otherwise than through the normal trial process, which include mediation or arbitration. scheme that you are part of, for example if you are a member of a trade association which runs its own scheme, or complaining to the Small Business Commissioner if the dispute relates to you getting paid by a larger business;
A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. (see Q&A 9 and following);
A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. (see Q&A 16 and following); or
bringing a claim in court.
If the matter is not complex and is worth £10,000 or less, it is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer.. You can run such a claim yourself without a lawyer if you wish. See Starting a small claim against someone else for a DIY guide on how to bring a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer., including a template A final warning letter before legal action is taken. Also known as a letter before claim. for debt or non-debt claims (Letter before action) and Small claims toolkit, which will take you through all the relevant stages and provide a How-to guide.
Note that A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. issued since 22 May 2024 are automatically referred to a compulsory one-hour A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. with the court's A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer.'s A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. Service. These sessions are free.
See Customer service or Customer service for online sales for details of how to deal with specific complaints. Note that People purchasing goods and services for personal use/acting outside of their professional or working capacity. in particular have significant rights when it comes to problems with any product or services you have provided.
If anyone else (eg a supplier or subcontractor) raises an issue with you via informal correspondence, such as by telephone or an informal email, take it seriously and deal with it quickly where possible. This is your best opportunity to resolve the matter informally and minimise time wasted and costs to your business.
Acknowledge the complaint as soon as you reasonably can, take steps to understand it and request further information if you need it. Make sure you keep any documents or other evidence relating to the matter (eg invoices, email chains, proof of delivery). It is very important that you do not lose or destroy any evidence as you could be penalised for this later if the matter escalates to court (see Q&A 4).
See Customer service or Customer service for online sales for guidance on dealing with complaints from your customers (whether they are People purchasing goods and services for personal use/acting outside of their professional or working capacity. or other businesses).
For all other kinds of complaints or demands, if you do not engage properly, it can affect your business relationships and reputation. If the matter is serious and eventually escalates to court, you could be penalised for ignoring it. You might:
have to pay more of the other side’s Fees, charges and expenses paid to lawyers for their services.; or
have to pay more of your own costs than you would have otherwise.
These costs consequences do not normally apply if the dispute is worth £10,000 or less.
A failure to find an informal A formal decision made by the directors or members of a company, which binds the company once it is passed. early on does not necessarily mean the dispute will end up in court; there are other options you can try (see Q&A 2).
A formal letter threatening legal action will often be titled 'A final warning letter before legal action is taken. Also known as a letter before action.' or 'A final warning letter before legal action is taken. Also known as a letter before claim.'. A clear warning of this sort is normally required before legal action can be properly started against your business. The letter will usually set out the facts, what the problem is and what the other side wants you to do to resolve it.
If you receive such a letter, you must:
The letter (a 'A final warning letter before legal action is taken. Also known as a letter before claim.' or 'A final warning letter before legal action is taken. Also known as a letter before action.') will normally give you a time limit for your response. Try to meet this unless it is unreasonably short in the circumstances.
If no date is given (or if an unreasonably tight deadline is given by the other side), you must respond within 14 days where possible. This applies if the matter is a straightforward complaint, eg that you have not paid an invoice or delivered some Physical items being sold. Distinguished from digital content and services, neither of which are physical items.. For very complex cases, longer is allowed for you to put your response together if you need it, but never more than three months. It is always sensible to write to the other side to acknowledge their letter and let them know how long your response will take. This should prevent them from starting a claim against your business prematurely.
Say whether you will do what is asked, or whether you want to challenge it. If you want to challenge it, you should explain which parts you disagree with and why. Attach evidence to support your position, including copy documents where possible (eg correspondence, contracts, invoices, proof of delivery etc). It is important to take care and be accurate. If the matter escalates, any change in your position later on will harm your case.
When deciding whether to agree to any demands at this stage, the rights and wrongs of the situation are important, but you should also weigh up:
the sums of money involved, including the Fees, charges and expenses paid to lawyers for their services. of standing your ground. Bear in mind that if a claim is brought against you, and you lose, you are likely to be ordered to pay some or all of the Fees, charges and expenses paid to lawyers for their services. incurred by the other side;
the effects on your relationship with the other side; and
any intangible costs of dealing with a dispute. It is likely to take time and focus from the day to day running of your business and can be very stressful.
If the matter is complex, or involves a large sum of money, you may wish to hire a lawyer to draft your initial response. See Q&A 43 for how to find a suitable lawyer.
Yes. There are rules about preparatory steps you must take in some types of claims, including claims for money owed to you by individuals (as opposed to businesses). They are designed to encourage you to resolve your dispute without starting a claim if at all possible, and the court can impose costs sanctions for failure to comply or order that proceedings be stayed while steps to comply are taken.
The rules are:
any rules that apply to the type of claim you are making (known as a Rules about the steps that should be taken before suing someone. There are different pre-action protocols depending on what the claim is about. ).
For example, if your business is bringing a debt claim against an individual or A business owned and operated by a single individual, which is not a company or partnership. The individual is entitled to keep all profits made by the business (subject to any tax reduction) but is also personally responsible for any losses that the business makes., you will need to comply with the Pre-Action Protocol for Debt Claims. The full list of Rules about the steps that should be taken before suing someone. There are different pre-action protocols depending on what the claim is about. currently in force can be found on the Ministry of Justice's website.
Full coverage of compliance with these rules is outside the scope of this service.
The steps include a requirement to send a A final warning letter before legal action is taken. Also known as a letter before action. (also known as a A final warning letter before legal action is taken. Also known as a letter before claim.) to the other party, which is your opportunity to explain what has gone wrong and what you want the other side to do or pay to make it right. Unless you intend to run any legal proceedings yourself (eg if it is a simple A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. worth £10,000 or less), it is advisable to have a lawyer draft this letter for you. If your matter is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer., see Starting a claim against someone else for guidance on writing your own A final warning letter before legal action is taken. Also known as a letter before claim., including a template you can use whether you are bringing a debt claim or a non-debt claim (Letter before action). You can also find this letter as part of the Small claims toolkit, together with guidance and related documents.
A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. is a popular form of The process of resolving a dispute between parties, whether through formal processes such as litigation or arbitration, or more collaborative processes such as mediation.. An impartial A person who is not directly involved in an existing relationship, transaction or dispute; for example, someone who is not a named party in a contract. (the An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation.) meets with you and the other side together and helps you to reach an agreement between yourselves. The meeting can take place at a physical location or online via video-conferencing.
A An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation. is not like a judge or an The independent and impartial person who decides how a legal dispute should be resolved in a process called arbitration. as they will not make a decision about your dispute.
It is always worth considering A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. when it is offered. It can be quick and cheap, as most A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. processes will only require a day or two. There can be consequences if you unreasonably refuse to A voluntary and confidential form of dispute resolution. It involves an independent, impartial person helping two or more individuals or groups reach a solution that is acceptable to everyone. (see Q&A 11).
The focus of A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. is on your broader interests, rather than on technical legal rights. For this reason, factors such as reputational issues, personal emotions or business relationships can be taken into account if necessary. This means that, if successful, the process can assist in maintaining your commercial relationship with the other side. Further, unlike litigation, you and the other side get to decide the outcome, as opposed to having a judge's decision imposed on you.
A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. issued since 22 May 2024 are automatically referred to a compulsory one-hour A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. with the court's A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. Service. These sessions are free.
You are legally obliged to at least consider methods of resolving a dispute without taking it to court. If you behave unreasonably in refusing to A voluntary and confidential form of dispute resolution. It involves an independent, impartial person helping two or more individuals or groups reach a solution that is acceptable to everyone. and the matter ends up in court, you may be ordered to pay more of the other side’s Fees, charges and expenses paid to lawyers for their services., or have to pay more of your own costs than you would have otherwise. These costs consequences do not normally apply if the dispute is worth £10,000 or less.
If you ignore a request to A voluntary and confidential form of dispute resolution. It involves an independent, impartial person helping two or more individuals or groups reach a solution that is acceptable to everyone. before the claim is issued, you may find yourself in A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. anyway at a later stage. The court has power to order the use of ADR: A collective description of methods of resolving disputes otherwise than through the normal trial process, which include mediation or arbitration. once a claim has been issued, and all A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. will be referred to the A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. Service early on in the litigation process.
If a A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. does not end in an agreed A formal decision made by the directors or members of a company, which binds the company once it is passed. , everything that was said and done during it is confidential. This means that in any legal action, the judge will not be told what went on at the A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement.. It means you can speak freely during a A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. without having to be concerned about prejudicing any later Legal action which is being pursued through a court..
Unless you hire a lawyer to help you (see Q&A 43), the cost of A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. will usually just be the An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation.'s fee and the hire of a suitable venue to meet if you do not have anything available. Your An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation. will explain what sort of venue will be suitable for your A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement..
This An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation.’s fee is dependent on the amount of money involved in the claim and the An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation. you choose, but typical fees range from a few hundred pounds to a few thousand pounds.
The costs of the An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation. and location are usually divided equally between the parties, although you can agree a different divide if you want to. A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. through the court's A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. Service is free.
If you agree to try A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement., search for a qualified An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation.. Try the Centre for Effective Dispute Resolution website (use the 'find a CEDR An independent, impartial person who helps two or more individuals or groups reach a mutually acceptable solution to a legal dispute in a process called mediation.' tool on the right hand side) or the Civil Mediation Centre directory..
Yes. Although conventionally a A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. is conducted at a physical meeting between the parties, mediations may be (and increasingly are) conducted remotely via online video-conferencing apps like Zoom and Skype, or by telephone, eg via the A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. A voluntary process by which an independent third party (a mediator) helps two or more parties in dispute come to a mutually acceptable agreement or arrangement. Service.
A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. is a process by which a dispute is resolved by an impartial The independent and impartial person who decides how a legal dispute should be resolved in a process called arbitration., in private. It aims to provide a final and binding decision on a dispute, and is often used to resolve larger-scale disputes between businesses without the expense and publicity of going to court.
An A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. hearing can be conducted at a physical location or sometimes online via video-conferencing.
Yes, if you have any kind of written agreement that says you have to resolve any disputes using A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties., you cannot refuse it unless the other side agrees.
If you do not have a written agreement to arbitrate, it is up to you whether you wish to or not.
Check any agreement, terms and conditions or correspondence between you and the other side for mention of A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties.. There does not have to be a signed contract between you; an exchange of correspondence in which you both agree to A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. is enough.
First check if you are legally required to arbitrate (see Q&A 17). If you are free to choose, consider:
Privacy
A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. is a private process, unlike going to court which is open to the public. Therefore, if you want a dispute to remain confidential, A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. might be preferable for you.
Flexibility
A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. is more flexible than going to court. You can choose the The independent and impartial person who decides how a legal dispute should be resolved in a process called arbitration., set timetables, adapt the rules and generally tailor the whole process to your specific circumstances.
Cost
A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. may often be cheaper than going to court, but not always. See Q&A 19.
If the other side is overseas
If the other side is based abroad, resolving the dispute by A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. can create a decision that is easier to enforce than a judgment from the courts of another country.
A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. can be cheaper than going to court, but it is not always, especially in small or low-value matters. It is certainly not cheap – the The independent and impartial person who decides how a legal dispute should be resolved in a process called arbitration. will usually charge between £250 and £750 per hour.
You are likely to want a lawyer to represent you at an A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties., just as you would in most court cases, so they must be paid for too. Usually, the The independent and impartial person who decides how a legal dispute should be resolved in a process called arbitration. will decide who will pay the costs, including the lawyers' fees, at the end of the process. As a general rule, the loser pays the winner's costs.
Yes. Rather than leaving it up to the The independent and impartial person who decides how a legal dispute should be resolved in a process called arbitration. (see Q&A 19), you can agree between yourselves to a different costs split, regardless of the outcome of the A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties.. Agreements like this can only be made after the dispute has arisen. This usually means that you cannot rely on anything in your standard terms and conditions that says costs of any A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. must be divided in a particular way between you.
The Centre for Effective Dispute Resolution's Arbitration Services page is a good starting point to search for arbitrators, although you should generally hire your own lawyer before engaging in A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. (see Q&A 43) and they will advise you on suitable arbitrators and how to begin the process.
Yes. Although normally an A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. is carried out at a physical hearing attended by the parties and their advisers, arbitrations may sometimes be conducted remotely via online video-conferencing apps like Zoom and Skype.
A 'A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer.' is a special type of offer to settle a dispute with specific consequences attached to your acceptance or refusal of the offer. You can recognise such an offer as it must be in writing and must state that it is a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer.. It may do this by stating it is made under 'Part 36 of the CPR: The rules of court which govern the practice and procedure to be followed in the civil division of the Court of Appeal, the High Court and the County Court. '. Either a claimant or a defendant can make a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer..
If you have received a general offer to settle a dispute that does not state it is a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer. see Q&A 29.
When thinking about whether to accept a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer. and pay the amount specified, consider:
the rights and wrongs of the situation, alongside the impact on your business of standing your ground. Bear in mind a legal dispute can steal time and focus from the development of your business;
the consequences of accepting the offer – acceptance of a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer. normally requires the paying party to cover the Fees, charges and expenses paid to lawyers for their services. of the receiving party; and
the potential consequences of not accepting if the matter proceeds to court. If you ultimately do less well than the offer, you will be penalised, unless the matter is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. (simple and worth less than £10,000). The penalty depends on whether you are defending the claim or bringing it. See Q&A 25 if you are defending the claim and Q&A 26 if you are the one who is claiming something.
If you have received a general offer to settle a dispute that does not state it is a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer. see Q&A 29.
If you do not accept a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer. and the A command made by a court or a judge which requires a person to do or not do something. eventually made is less favourable to you than the offer was, there are consequences. On top of any amount due that was the subject of the claim you will usually have to pay a penalty, unless the matter is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. (simple and worth less than £10,000). The penalty is payable to the other side and consists of:
additional interest (up to 10% above base rate) on the sum you have been ordered to pay;
their Fees, charges and expenses paid to lawyers for their services. dating from the deadline for a reply given in the offer;
interest on those Fees, charges and expenses paid to lawyers for their services. (up to 10% above base rate); and
a penalty charge. Where the claim is just for money, the penalty is 10% of the amount (up to £500,000) you are ordered to pay the other side, and 5% on any amount over £500,000. The penalty is capped at £75,000.
If you have alleged that the other side owes you money, and the court orders them to pay you the same or less than they offered you in settlement, there are consequences. You will usually have to pay a penalty, unless the matter is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. (simple and worth less than £10,000). The penalty is payable to the other side and consists of:
their Fees, charges and expenses paid to lawyers for their services. dating from the end of the period for response given in the offer; and
interest on those costs.
You must act promptly if you receive a A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer.. It will usually say that you only have 21 days to respond, although you can accept it at any time until it is actually withdrawn.
You can accept the A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer. by sending a written letter of acceptance. If Legal action which is being pursued through a court. have started, you must also send your acceptance to the court. You must then pay any settlement amount you have agreed to within 14 days from your letter of acceptance.
If you are in a dispute and the other side sends you an offer to settle it, you should take time to consider the settlement's terms carefully.
If you have received an offer from the other side in a dispute and it is stated to be a 'A special type of offer to settle a dispute with specific consequences (eg about the payment of any legal costs) attached to the acceptance or refusal of the offer.' or an offer under 'Part 36 of the CPR: The rules of court which govern the practice and procedure to be followed in the civil division of the Court of Appeal, the High Court and the County Court. ' see Q&A 23 and following.
When considering whether to accept an offer to settle a dispute, consider:
the rights and wrongs of the situation;
the impact on your business of standing your ground. Bear in mind a legal dispute can steal time and focus from the development of your business;
any need to maintain a working relationship with the other side; and
the financial consequences of not accepting the offer. If the matter escalates to court and you are ordered to pay more than the other side offered to accept, or the other side is ordered to pay you less than they offered, you will normally be penalised. The court does this by ordering you to pay some or all of the other side's Fees, charges and expenses paid to lawyers for their services., even if you have technically won the case.
These costs consequences for failing to beat an offer at trial do not normally apply if your case is a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. (ie a simple claim worth £10,000 or less).
It is advisable to attempt to settle a dispute before launching legal action (see Q&A 1).
For straightforward disputes worth £10,000 or less, you can bring a comparatively quick and cheap A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer. yourself in the A local court for civil (non-criminal) claims between people or companies.. You do not need a lawyer to do this, although you can hire one if you wish. See Starting a small claim against someone else for a how-to guide, including a template A final warning letter before legal action is taken. Also known as a letter before claim. for debt or non-debt claims (Letter before action). You can also find this letter as part of the Small claims toolkit, together with guidance and related documents.
For any claim that is not a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer., as well as the strength of your case, bear in mind the following before taking legal action:
Cost
Going to court is expensive. See Q&A 32 for a breakdown of the likely costs involved.
Time and distraction
Going to court is time-consuming and distracting. Court cases can take many months to get to trial, and the individual steps of preparing for trial (eg visiting your lawyer, writing Signed written statements of a witness's evidence, including a statement from the witness that he believes that the facts in the statement are true., searching for all relevant correspondence) are each quite time-consuming and can be stressful, detracting from your ability to focus on your business.
Confidentiality
Court cases are generally held in open court. This means that members of the public including your competitors or even journalists can come along and watch. Anything said in open court is public information so can be used by those listening for any purpose. In other words, to go to court requires you to be comfortable telling anyone (potentially including the press) about the ins and outs of your dispute.
If the other side is based abroad
Legal action can be complicated if the other side is based abroad. See Q&A 31.
Bringing a claim against someone who is based abroad can be complicated and it is recommended that you seek legal advice before considering whether to pursue them. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.
Bear in mind that even if you successfully sue a A private company limited by shares incorporated and registered in England and Wales. or individual based abroad, it may be very difficult to enforce any judgment against them if they do not voluntarily comply. A form of alternative dispute resolution whereby the parties agree to allow an independent and impartial person (the arbitrator) to decide how their legal dispute should be resolved. Any decision made by an arbitrator is legally binding on the parties. is sometimes a better option for this reason. See Q&A 18.
If your claim is a simple one for £10,000 or less see Considerations before bringing a small claim.
For any claim that is not a A relatively low-value (less than £10,000) and simple legal claim. Small claims are generally dealt with much more quickly and simply than more serious legal disputes, and in many cases those involved can handle the dispute themself without hiring a lawyer., going to court is expensive. The exact cost of bringing a claim to court is difficult to predict, but at a minimum you will have to pay up front for your lawyer's fees and a court fee to start the claim, with additional fees payable to the court as your claim progresses. See Q&A 33 and following.
If you lose your claim, you will generally also have to pay your own Fees, charges and expenses paid to lawyers for their services. and some or all of the other side's. If you win your claim, the other side will usually only have to pay about 75% of your costs – the other 25% you will normally still have to pay yourself. This 25% chunk could easily take a significant bite out of any An sum of money ordered by a court to be paid to a person as compensation for loss or injury. you are awarded – or maybe even outweigh them entirely. Furthermore, even if your winnings eventually cover these costs, the costs usually need to be paid up front, whereas any winnings will come at a later date after the case ends. Be aware that this might place financial stress on your business at the beginning of the court case and that there is a risk the other side will not pay up voluntarily even in the face of a A command made by a court or a judge which requires a person to do or not do something. .
The court charges a fee to start a claim; its size depends on the value of your claim::
Claim amount | Fee to start claim |
Up to £300 | £35 |
£300.01 to £500 | £50 |
£500.01 to £1,000 | £70 |
£1,000.01 to £1,500 | £80 |
£1,500.01 to £3,000 | £115 |
£3,000.01 to £5,000 | £205 |
£5,000.01 to £10,000 | £455 |
£10,000.01 to £200,000 | 5% of the claim amount |
More than £200,000 | £10,000 |
If your matter requires a trial or final hearing, whoever brought the claim must pay a hearing fee. The size of the hearing fee also depends on the value of your claim:
Claim amount | Fee for hearing |
Up to £300 | £27 |
£300.01 to £500 | £59 |
£500.01 to £1,000 | £85 |
£1,000.01 to £1,500 | £123 |
£1,500.01 to £3,000 | £181 |
Over £3,000 (The procedure and timetabling used for legal claims which are relatively simple and low-value (less than £10,000).) | £346 |
For larger claims (those which qualify as The procedure and timetabling used for legal claims which are too valuable to be small claims, but are still of relatively low value and complexity (and so are able to be dealt with quickly)., The procedure and timetabling used for legal claims that are too valuable or too complex to be small claims track or fast track, and which have a money claim value of no more than £100,000, limited parties and expert evidence, and an expected trial length of less than three days. or The procedure and timetabling used for legal claims which are too valuable or too complex to be small claims track, fast track or intermediate track claims. claims), the hearing fees are higher. Generally, they are £619 for matters which are not expected to last more than a day (The procedure and timetabling used for legal claims which are too valuable to be small claims, but are still of relatively low value and complexity (and so are able to be dealt with quickly).) and £1,334 for longer, higher value cases (intermediate or The procedure and timetabling used for legal claims which are too valuable or too complex to be small claims track, fast track or intermediate track claims.).
There are additional fees payable to the court each time you make an application. For example if you miss a deadline that the court has imposed and want to ask permission to extend the deadline, the application fee is £313. These fees can rack up over the course of a case.
If you are have a low income or receive benefits, you may be eligible for the government's Help with Fees scheme: this will not usually apply to businesses but does include the self-employed. You can check your eligibility for the Help with Fees scheme and apply here. The limits for this scheme were increased in November 2023, so more people are now eligible for help with court fees.
If you receive a legal The official form which must be filled in by the claimant and issued by the court to start a civil claim against another person or company., it means someone is suing you or your business. It is very important that you act promptly as, if you leave it too long, you may find a A command made by a court or a judge which requires a person to do or not do something. is made against you.
You must carefully read over everything in the The official form which must be filled in by the claimant and issued by the court to start a civil claim against another person or company. and the response pack you are given and respond in one of the following ways:
Paying the claimant the full amount
If you accept the claim made by the claimant and want to resolve the matter straight away, you can simply pay the claimant the amount of money they are asking for (including interest and the court fee). Ensure that the money arrives within the 14-day deadline and ask for a receipt or keep some other proof that you have sent the money.
Admitting the claim but not paying up-front
There are two situations in which you would want to admit the claim (ie fully accept the claimant's claim is true) but not pay the money up front. The first is where you accept the claim but cannot afford to pay the whole amount straight away. The second is where you accept the claim but the claimant has not asked for a specific amount of money so you do not know what to pay. In either case, see Responding to a small claim for how to respond in these circumstances.
Admitting some of the claim but defending the rest
If you think some of the claimant's claim is true, but some of it is not true (eg perhaps you think you should pay some money, but not all of what is claimed), you can admit part of the claim and defend the rest. See Responding to a small claim for how to do this.
Defending the whole claim:
If you do not think you owe the claimant any money at all, or think you have already paid them, you can defend the whole claim. See Responding to a small claim for how to do this.
Asking for a time extension to prepare your defence
If you need more time to prepare your defence to the claim, you can get an extra 14 days. See Q&A 36 for how to do this.
This depends on whether the other side has included the The statement which sets out the details of a claimant's legal claim against the defendant(s). It is usually written in or attached to the claim form, but is sometimes sent separately after the claim form. within the claim pack. The statement which sets out the details of a claimant's legal claim against the defendant(s). It is usually written in or attached to the claim form, but is sometimes sent separately after the claim form. are the written details of what the claim is about and can be attached as a separate document or written in the box provided on the The official form which must be filled in by the claimant and issued by the court to start a civil claim against another person or company. if the matter is simple.
If the form says 'The statement which sets out the details of a claimant's legal claim against the defendant(s). It is usually written in or attached to the claim form, but is sometimes sent separately after the claim form. to follow' you do not usually have to respond yet.
Once you have the The statement which sets out the details of a claimant's legal claim against the defendant(s). It is usually written in or attached to the claim form, but is sometimes sent separately after the claim form., you must respond within 14 days. If you are late, the other side can ask the court to give judgment in their favour automatically.
Yes, you can get an extra 14 days (so 28 days in total from receiving the The statement which sets out the details of a claimant's legal claim against the defendant(s). It is usually written in or attached to the claim form, but is sometimes sent separately after the claim form.) to write a defence.
You must send a special form to the court to get this extra time. You still need to respond properly with your written defence within this extended time limit though – if you do not, you are taken to have ignored the claim, and the claimant can ask the court to make an order in their favour without delay (see Q&A 37).
The form is called an A document sent by a defendant to a claim, stating that they have received the claim and indicating how they intend to respond.. Fill it in (Form N9) and send it to the court, who will notify the claimant. A copy of this form should be in your response pack, with instructions on how to fill it in.
You may wish to hire a lawyer to advise you on what to do or deal to with the claim entirely on your behalf. See Q&A 43 and following for how to find a suitable lawyer.
The other side can get a A command made by a court or a judge which requires a person to do or not do something. against you. If you do not respond properly to a The official form which must be filled in by the claimant and issued by the court to start a civil claim against another person or company. (see Q&A 34 and following), and do so in time (see Q&A 35), the other side can ask the court to give judgment in their favour automatically. It is very important that you do not ignore a The official form which must be filled in by the claimant and issued by the court to start a civil claim against another person or company. if you receive one.
A A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. is a particular type of formal demand for payment of a debt. It is a formal precursor to your A person or business to whom money is owed. trying to make you Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. or to have your business declared Unable to pay debts as they become due.. If you owe money, this is one of the ways a A person or business to whom money is owed. might try to force payment.
If your business operates as a A private company limited by shares incorporated and registered in England and Wales. , the minimum amount of debt that can be demanded in a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. is £750. Where you operate as a A business owned and operated by a single individual, which is not a company or partnership. The individual is entitled to keep all profits made by the business (subject to any tax reduction) but is also personally responsible for any losses that the business makes. or partnership, or the debt is otherwise personal to you, the amount must be at least £5,000.
You can recognise a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. because the official form used clearly states what it is in the title. A simple letter demanding payment is not a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee..
You can generally issue a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. for any debt your business is owed, so long as the debt is large enough (£5,000 if the money is owed by an individual, £750 if it is owed by a A private company limited by shares incorporated and registered in England and Wales. ).
Be cautious of sending a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. if you think that your debtor may dispute whether the debt is payable. They can challenge it in court if they disagree with it and if they are successful in doing so, you could have to pay their Fees, charges and expenses paid to lawyers for their services..
For further guidance on how to send a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee., see Dealing with late payments without going to court.
If your A private company limited by shares incorporated and registered in England and Wales. has received a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. and the debt is genuinely due, then you should take steps to pay it or make arrangements with the A person or business to whom money is owed. to settle it (eg to pay in instalments, sometimes formalised in a An arrangement to pay off a company's debts in accordance with a schedule, approved by creditors who are owed at least 75% of the company's debt. A CVA can only be arranged through a qualified insolvency practitioner. ). You should not ignore a valid A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. (see Q&A 42).
If your A private company limited by shares incorporated and registered in England and Wales. cannot afford to pay, get professional advice on what protective measures you can take. You could put your A private company limited by shares incorporated and registered in England and Wales. into administration (whereby an A person appointed to manage the affairs and property of an insolvent company. will take control of it to deal with the debts), or apply to liquidate your A private company limited by shares incorporated and registered in England and Wales. yourself which may be preferable to a forced Winding up a company, ie the ending of all its business activity and the selling of all of its assets. at the hands of a A person or business to whom money is owed. .
If you do not believe the A private company limited by shares incorporated and registered in England and Wales. 's debt is genuinely due, you can apply to court to stop your A person or business to whom money is owed. trying to The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company. your business. It is advisable to contact a lawyer immediately if this is the case. See Q&A 43 for how to find a suitable lawyer.
You should not ignore a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. made against you personally (see Q&A 42). If the debt is genuinely due then you should take steps to pay it or make arrangements with the A person or business to whom money is owed. to settle it (eg to pay it in instalments).
If you cannot afford to pay, you should see a Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. specialist or debt management agency. There are various actions you can take which may be preferable to Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor., for example, entering an A legally binding arrangement whereby someone in debt agrees a way of repaying the people they owe money to over time. Also known as an IVA. for the repayment of your debts, or getting a A method of writing off debts up to £20,000. This is an alternative to bankruptcy, but not everyone is eligible for a debt relief order, and they do not cover all types of debts..
If you do not believe the debt is genuinely due, you can challenge the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. in court if it is addressed to you personally. It is advisable to contact a lawyer immediately if you wish to do this. See Q&A 43 for how to find a suitable lawyer.
This depends on when you receive the A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee., and who it is made against.
If you receive a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee. against yourself personally, it is imperative that you respond promptly. If you fail to take steps to pay the sum within 21 days of being Delivered or sent documents to someone for use in court proceedings in a way that complies with court rules. with a A formal, written demand for payment that can be sent to a debtor without going to court and without paying any kind of court fee., your A person or business to whom money is owed. can ask the court to 'The process whereby a company is closed. Its assets are sold to pay off creditors and other expenses. Anything remaining is distributed to the shareholders of the company.' your business (ie liquidate it) if it is a A private company limited by shares incorporated and registered in England and Wales. , or can apply to Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor. you if you are a A business owned and operated by a single individual, which is not a company or partnership. The individual is entitled to keep all profits made by the business (subject to any tax reduction) but is also personally responsible for any losses that the business makes. or the debt is yours, personally.
For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service. Note that if you have legal expenses insurance that will cover the cost of a lawyer, check the terms of your cover as you may be obliged to use a particular firm.
When considering potential lawyers, you should consider the following factors:
whether they will give you a fixed-fee or free initial consultation to discuss your case with you;
how much they charge for their fees. Some lawyers will charge a fixed fee for your whole dispute; others will charge you per hour which they work, so costs are harder to predict and could grow rapidly. Some might offer a 'no-win-no-fee’ service, although this is less commonly available for business disputes. All lawyers must give you an accurate assessment of their costs before you engage their services and as the matter progresses;
their experience in dealing with similar matters to yours, including whether they are familiar with the sector in which your business operates; and
any recommendations or reviews of their service.