The prospect of having to go to court to settle a commercial dispute is daunting for anyone in business.

Because of the time and expense involved in taking a claim so far, many parties to litigation decide to opt for ‘out of court’ settlements.

But recent changes to the process of settling out of court introduce greater uncertainty into offers of settlement. These changes could, arguably, leave claimants in a worse position than before they were introduced.

Previously, defendants (that is, parties who are being sued) had to lodge an actual payment with the Court if they wanted to make a valid offer of settlement. Now, they need only make an offer in writing.

One of the main reasons for the changes was to try to reduce the amount of court time taken up processing such payments, a wholly laudable objective.

But it may mean that claimants agree to settle their claims, only to find that the other party doesn’t have the cash to pay what it has agreed to pay.

If they find themselves in such a situation, claimants may have to spend more time and money going back to court to enter and then enforce a judgement for non-payment. And, if a defendant company is wound-up, there might still be no money at the end of all that effort.

So, what is the answer? If there is one underlying solution, it rests with claimants. They need to carry out more checks on the individuals and companies they do business with to ensure that, if relationships break down, they have a clearer idea as to the financial means of the other side even before launching legal action.

CONTACT jeff.lewis@brabnerscs.com