They disappeared, delivered bad work, refused to pay you, or otherwise breached the terms of your agreement.
You tried to negotiate, and the negotiations either failed or the other parties did not even respond to your emails or phone calls.
Decision Point: Is this dispute worth your time and energy?
You need to determine whether there is enough money or potential harm at stake to justify going further, or if you are better off simply walking away.
In some disputes, sending a cease and desist letter is clearly worth it, even if you secretly know you’d never sue them in court. Occasionally, you know enough about the other person to conclude that they won’t even respond to a letter, and the best use of your time is to ignore sunk costs and just let it go.
Example: Once I contracted with someone to do a website header and some other graphic design projects. The first project was completed on time and as promised, but as the projects progressed, communication broke down and there was a lack of understanding regarding my design requirements. From their behavior on social media and their responses to me, I doubted anything would be resolved. I decided to terminate the contract, keep what deliverables I had already received, and write off the money as a learning experience.
Here are 4 escalation options for you to consider if someone breaches the terms of their contract with you:
- Demand Letter or Cease & Desist Letter. You may have already emailed or informally discussed what you want, but this is the point where you send a formal letter demanding what you want the other side to do (Demand Letter) or stop doing (Cease & Desist Letter). This letter can be written by you or an attorney, and can range from an informal email to a formal letter sent by certified mail. The most important factor is that you clearly state the following: (1) the contract, agreement, or terms in dispute, (2) what they specifically did or did not do, (3) why they were required to do or not do that, and (4) your demand. I also suggest that you give a clear deadline, so you have a determined cut off point at which you either drop the matter, or go further. In some disputes you are required to send a demand letter before you can escalate further.
- Collection Agency. If the other side owes you money, you may be able to sell this accounts receivable (by itself, or in a group with all of your unpaid debts) to an agency who will collect on the debt. Be aware that if you sell this account to collections, you will not have control over the tactics the agency will use to collect the debt (and it may reflect poorly on you).
- Licensing or Certification. In some cases, the other side is liable to another party through a licensing agreement, certification program, or licensing board. You may be able to go through that organization or company to have them either mediate your dispute, or provide leverage to help you.
- Litigation. Whether litigation is worth the cost is a case-by-case decision. If you have a small dispute but are in the same city or town as the other side, you may be able to easily sue them in a “Small Claims” division of your local court system, which is informal, quick, and does not require a lawyer. If the other side is in another jurisdiction, it will be more expensive for you to file a suit against them (in small claims or regular court), since you can only sue someone where they are located, where the transaction took place, or where they agreed to be sued. Obviously, if you hire an attorney to help you, then that is an additional cost which may or may not be recoverable if you win (in the United States, you generally only recover attorney’s fees for contractual disputes if that was specifically stated in the contract). In some jurisdictions, there are attorneys who can represent you only for particular parts of a lawsuit, which may help save you money.
Would you like to chat about what approach to take if you are having a legal challenge? Or something else about your small biz? Let’s connect!