Commercial claims are an unfortunate fact of life for most businesses. They can be stressful and expensive to deal with.  Do what you can in your contracts and business dealings generally to minimise the risk and reduce exposure to claims.  In a previous blog post we gave you some tips on how to avoid claims against your company.  Here we look at what you can do to reduce the impact of any claims.

Make sure you have a written contract, that your terms apply and:

  1. Agree the amount of damages you will pay for any breach of contract in advance. But be careful not to agree an amount much higher than you are really due because this could be unenforceable.
  1. Make sure things will be dealt with how and where you want, not in another country under a different legal system.
  1. Make sure everything you do is properly documented.  Make it company policy to keep documents, including electronic documents.
  1. Review your contracts regularly – apply the ‘what if’ test – in the event of a particular scenario arising would your contracts do what you want them to?
  1. Make sure you have the right controls in place and carry out regular reviews.  If you are involved in design, manufacture and sale of goods have a product recall plan ready just in case you ever need it.  This can greatly reduce the financial impact of any claim.

We are not saying that if you do all of these things you will avoid claims completely but you will reduce the threat and impact of claims.  So check your contracts, formulate the right policies and procedures and make sure you’re in the driving seat if anything does go wrong.

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.