Legal action should always be a last resort but occasionally, it will be necessary.
The fact that the small claims limit has been increased to £10,000 is good news to a point but you need to make sure that all of your contractual paperwork is in order before you issue your claim. I am often disappointed when I ask my clients for proof of their debt, that the only thing that they come up with is a copy of their invoice(s). An invoice in itself is not proof of debt, anyone can raise an invoice and this does not demonstrate that the debtor owes you money. An invoice is post-contractual i.e. ‘after the fact’.
Court cases are won or lost on pieces of paper, so how do you ensure that you have a fighting chance when it comes to a Court hearing? The first thing that you will need to prove is that there was a contract in place. Verbal orders are as binding as written orders but the best witness that you will ever have is a piece of paper so we recommend the following procedure in all cases when you are dealing with a customer at the outset:
1. Always put your quotation in writing and send it to your customer with a copy of your terms and conditions (if you don’t have T&C’s get some! it is so important particularly when litigation is involved)
2. Get a written acceptance of your quotation from your customer, preferably a Purchase Order, but if your customer doesn’t use Purchase Orders, anything in writing will suffice as long as it states that your quotation and terms are accepted.
3. Most Important this is the stage where most people go wrong! when you receive your Purchase Order or written authority to proceed, you should send a LETTER OF ACCEPTANCE to your customer, thanking them for their Purchase Order and referring back to your quotation and terms and conditions.
4. Finally, when the works are completed or the goods are delivered, you should get a satisfaction note or delivery note signed.
If you follow the four golden rules above, then you won’t go far wrong