When you are considering disputing a claim, either you or your lawyer will ask a critical question – what is your claim worth? Correctly quantifying your claim is an essential component in any debt recovery litigation. In some instances this will be simple, in others more calculations will be required. Below, we set out just some of the factors that will influence the amount of your debt recovery claim.
What Is The Agreement?
Often there is an initial contract that parties enter into at the outset of their relationship. The agreement sets out terms and conditions on the purchase orders and invoices among other things. In an ideal world, there would be:
- One clear written contract between you and the defendant;
- Purchase orders evidencing deliveries;
- Invoices for the goods or services; and
- No dispute about the goods or services.
In reality, disputes can still arise despite having an agreement in place. Additional discussions between the parties may alter the standard terms and conditions. These discussions or documents may amend the entire terms and conditions, or the terms of a particular transaction. Where you have competing forms, this can lead to arguments in court about what terms and conditions governed the transaction or transactions that are in dispute.
Your will need to work with a lawyer that has experience handling contractual disputes to determine which terms and conditions applied. The terms and conditions will assist with a calculation of the debt and in determining the responsibilities of the parties.
When Is or Was the Payment Due?
Hopefully, your contract provides for a clear date of payment, for example ‘payment date is x’, or ’14 day terms’ from the provision of the invoice or some other event. If it doesn’t, the court will determine a debtor (therefore your defendant) has a ‘reasonable time’ to pay the debt. What is a ‘reasonable time’ will depend on individual circumstances.
Does Your Agreement Allow For Interest?
Ideally, your agreement and terms will make a provision for interest on any outstanding amounts, and how it is calculated. If not, we recommend you revise your terms to include a clause for interest.
If the conditions do not allow for interest on any outstanding amount, then you will not be entitled to recover interest on the debt unless you obtain a court judgment in your favour. If you commence legal proceedings, you will note your claim will usually include a simple interest amount.
Does the Defendant Have a Valid Offsetting Claim?
Sometimes the defendant may have a valid offset or counterclaim against you. Your lawyer will bring this to your attention and provide advice on the prospects of any possible counterclaim or offsetting claim. Being aware of this prospect early can help you build a case against your opponent’s offsetting claim.
Many factors alter what your claim is worth and how it is calculated. To avoid a dispute, ensure that your terms and conditions are clear and don’t conflict with other agreements or arrangments. If a dispute arises, seek advice from a lawyer to assess whether your claim is valid, what it is worth, whether your opponent may have a counterclaim and finally, filing your claim.
If you have any questions or need assistance with quantifying your claim, get in touch with our disputes lawyers on 1300 544 755.