Issue No. 32 - December/January
Litigation: write it down or write it off
by Anthony Kelly
Anthony Kelly, of Mellor Olsson Lawyers in Adelaide, is concerned many South Australian businesses are leaving themselves open to litigation.
We have so many ways to communicate now that many important messages and agreements are going unrecorded.
“It is fast becoming an inevitable consequence of running a business that at some stage you will be involved in litigation,” Anthony says.
“In most situations the result of litigation is unpredictable. However, there are steps that can be taken to ensure the best possible outcome.”
The first step to making litigation easier, or avoiding it altogether, is to put any contracts or agreements in writing.
When litigation reaches the courtroom and there is no written contract, the only way that the terms of the contract can be established is by the discussions that have occurred between the parties. This makes it necessary for each person involved to give evidence, often about something that occurred many years ago, and for the magistrate or judge hearing the case to make a decision as to which evidence is to be believed.
If a written contract is drawn up at the beginning of a business transaction much of the anguish, indecision and litigation cost can be avoided.
The court no longer has to base its decision solely on the evidence that someone gives. They can interpret the terms of the contract together with the evidence given and on that basis determine which party should succeed.
As an example, the following should always be put in writing
•equipment purchase agreements
•sales agreements and any other agreements involving purchasing or selling.
“The days of being able to rely on someone’s word are fast becoming obsolete,” Anthony says.
“People relying on purely oral contracts do so at their own peril.”
He is also concerned about the popularity of do-it-yourself law kits.