Business conflict? What to do in case of contract problems

An unpaid invoice, a dispute about additional work or a delivery that is suddenly contested: as an entrepreneur, you are familiar with these problems. They cost time, energy and can be very expensive. In this article, you can read how to stay in control in these kinds of situations and when it is time to seek legal advice.

Gathering facts and analysing the problem

Before you enter into discussions, it is wise to have your file in order. Many (contractual) problems escalate because the basic agreements are not identified quickly enough. Therefore, start gathering the relevant documents immediately. This includes not only the signed contract, but also the quotation, the general terms and conditions, and all relevant email correspondence or WhatsApp messages.

Then check what has been agreed. What has been determined about payment terms, guarantees and liability? If nothing has been agreed, the applicable laws and regulations, case law and the specific circumstances of the case must be examined.

File creation

As soon as a customer complains or fails to pay, start gathering evidence. Preferably in writing, i.e. by email or WhatsApp. A written confirmation of the content of a telephone conversation can also help to strengthen your position. Keep your communication businesslike and solution-oriented. Be careful with commitments before you know the legal consequences. These can be used against you later in any legal proceedings.

Legal instruments

Is the customer not fulfilling their agreements? As an entrepreneur, you have various legal instruments at your disposal. It is important that you use these correctly. First of all, there is the right of suspension. You may (temporarily) suspend your own performance under certain circumstances if the customer does not pay. Please note: there must be sufficient consistency between your (contractual) obligations and the outstanding claim. In principle, unjustified suspension makes you liable for damages.

Is your customer still not meeting their obligations? Then a formal notice of default is often necessary. A notice of default is a written summons in which you give the customer a final, reasonable period of time to still meet their obligations. A correct notice of default is crucial to put the customer in “default”. Only when default has occurred can you claim statutory commercial interest, for example. Default is also often required if you want to claim damages or terminate the agreement. In some cases, a formal notice of default is not required for default to occur, such as when a deadline expires or when you can infer from a communication from the debtor that they will fail to fulfil their obligation. To determine whether a notice of default is required, it is advisable to investigate this. We can assist you with this.

When is it time to engage a solicitor?

People often wait too long to seek help, sometimes out of fear of the costs involved. However, timely legal assistance often saves money in the long run. A specialised solicitor can prevent a protracted conflict by bringing the matter to a head immediately.

There are specific signs that indicate that it is best to seek legal assistance. For example, if the financial interest is significant and poses a risk to your liquidity. Specialist knowledge is also important in complex matters, such as international contracts.

You should also be alert if the other party threatens a counterclaim, negative publicity or dissolution, for example. In such cases – or if you want to have a prejudgment attachment imposed to secure funds – speed is often of the essence. A letter on law firm letterhead often makes more of an impression than a third reminder from your administration department.

Clarity about your legal position and next steps

Are you unsure about the right approach or do you notice that relations are hardening? Then don’t wait until the conflict escalates. A business dispute takes energy and distracts you from what you are good at: doing business. It is precisely at this stage that legal expertise makes the difference between a protracted issue and a quick, business-like solution.

We are happy to assist you. We analyse your legal position, assess your chances and, if desired, take over the communication. Whether the solution lies in a sharp summons, a strategic settlement or going to court: we determine the best next step together with you.

Advice

Do you have any questions about this article? Our solicitors are ready to advise you! Contact one of our solicitors by email, telephone or fill in the contact form for a no-obligation initial consultation.