What are Small Claims Court and Business Disputes?

By The Law Office of Yoel Molina.
 
The ability to rapidly and affordably resolve business issues in small claims court is becoming more appealing as the court's dollar restrictions increase.
The very individuals on whom business owners depend—their suppliers, clients, and subcontractors—can also be the cause of a variety of disagreements. Customers could default on their payments, subcontractors might abandon incomplete projects, and suppliers might offer inferior goods.
Small claims court is frequently used by business owners to collect past-due accounts receivable or to settle disputes with clients or rival companies.
 
Bill Collection in Small Claims Court:
Small claims court is particularly cost-effective for bill collection because it does not require bill collectors or attorneys, who frequently pocket up to half of what they collect as their fee. Small claims court does really function so successfully that in several courts, more than 60% of the cases are brought by businesses. There is little need for preparation or court time because a significant portion of these claims is uncontested by the defendant (they are aware of their debt and fail to appear). The best part is that a lot of defendants who don't want to damage their credit rating pay willingly, usually between the time they receive a final demand letter threatening a small claims lawsuit and the day a court judgment is issued.

Since the small claims court does not support letting small businesses collect debts, you must have concrete proof that a debt is owed. When defenders fight back and believe they have a strong defense, they stand a fair chance of succeeding or at the very least pay far less than the plaintiff is seeking. The National Center for State Courts discovered, for instance, that 20% of small claims cases that got to trial resulted in an unequivocal victory for the defendant. This study involved 996 small claims cases. Another 20 percent of the instances saw the defendant forced to make a payment that was far less than what the plaintiff requested.
 
Dispute Resolution in Small Claims Court:
Contractual disputes between two small firms or a business and a client are also frequent in small claims court. Frequently, a firm would claim that goods or services were of poor quality, delivered inefficiently, or not at all.

Here is a typical dispute as an illustration: Let's say, Ted, a freelance graphic designer, sues Tip Top Excavators for refusing to pay him for revamping the company's logo and newsletter. In response, Tip Top argued that because the work was both incomplete and delivered late, the contract was violated and no payment was necessary.

Each party will have the opportunity to tell their side of the story to a small claims court judge if they can't resolve the dispute themselves through negotiation or mediation.

For instance, if the graphic designer can present a written contract (or other documentation proving the existence of a contract), a passable sample of the redesigned newsletter, and a letter from an expert in the field confirming that the work followed industry standards, he will be in a very strong position. The graphic designer would be wise to get ready to counter the expected arguments the competing company will make. For instance, the graphic designer would want to offer a convincing justification if the design project was many weeks behind schedule, such as the fact that the customer requested time-consuming adjustments.

The defendant would be well advised to offer proof that either the graphic designer failed to meet other crucial contractual requirements or that the work was produced so tardily that it amounted to a substantial breach of the contract. Once more, the stronger the defendant's case is the more tangible proof they have (for example, a letter to the graphic designer pointing out the project's lateness and requesting fast completion).

The judge will make the decision after hearing from both sides. There is excellent news once more. The judge will either announce a ruling immediately or mail it out in a few days rather than making the parties wait around for months as can occur in an ordinary court. Both parties will understand where they are and be able to continue doing business in either case.

 
If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option 1