wait. Welcome to the latest official civil and legal insides podcast. Welcome to the first of these theories of litigation podcasts. My name's Jennifer Miles, a partner here. Ever shed Sutherland and I'm Helen Eastwood had a professional support for the Litigation and Dispute Management Practise group offer. Siri's is aimed at legal advisors or business teams who are not litigators but are managing claims or disputes with more than £25,000 in their role. The aim of this series is to help listeners faced with a dispute, better understand the key points they need to consider and be better informed to manage the litigation process, even if they do instructs A Listers. Our first series is focused on the pre action Stage III before a claim is formally served. In our first episode, we looked at the key points you should consider at the outset of a dispute with your internal team. Now, in Episode two, we're going to go on to look at what steps you should take in communicating with the other side. So with the introductions done, let's start Episode two entitled The Start of a Dispute Key External Steps. Helen, do you want to start us off. Sure. Thanks. Jen s o. The first point that I'm going to talk about is in relation to Reservation of Rights. In our first podcast, we talked about the importance of fact finding at the outset of a deceit. So looking at the example of a contractual dispute, that fact find involved determining whether there is a contract on the terms of that contract. Once you have completed the initial fact find exercise, you should consider reserving your rights in relation to that contract. But what do I mean by reserving your rights? Well, it tells the other party that you have become aware of facts which may amount to a breach of contract that you need time to investigate on DH to consider your options. But in the meantime, you want to reserve your rights to terminate or to enforce the contract before looking at why that's important. I think it's just helpful here to consider what termination means. In this context. It means the contract is discharged so the UN accrued future obligations owed by the parties fall away. It doesn't mean that the contract ceases to exist, so the primary obligations of the party in breach to perform the contract are replaced by secretary obligations to pay damages for the loss arising from the breach. Okay, Back to reservation of rights. Why is it important? Termination of contract isn't automatic. The innocent party can choose whether to accept the breach and treat the contractors discharged or toe. Affirm the contract. Impress the party who is in breach to perform the contract. And it's crucial that you don't do anything to jeopardise your ability to make that choice through your conduct. So with that in mind, it's really important to acknowledge the breach of contract in writing and send a reservation of writes letter without doing that. You risk affirming the contract Some of the clauses in the contract and they help you to avoid affirming, for example, that might be a way for Klaus and general. Talk more about that shortly. Thinking about the letter that reserves your rights, what do you need to include within that two? It should identify the agreement on the relevant clauses. You may also want to consider enclosing a copy of the agreement. The letter should explain which terms have been breached on the facts, which give rise to the breach. It's also important to set up the action, which you may take as a result of the breach that forms the basis of the rights which the letter is seeking to reserve. The contract will usually set out what rights the innocent party has following a breach, so set out what rights the contract has given you. But don't forget that the common law gives you rights beyond the contract. The most important common, all right, is determinate the contract for what is known as a repudiate any breach of contract. Essentially, that is a breach which is so serious that it goes to the root of the contract. So the letter should reserve all rights. But to write not specifically identified at this stage might be more difficult to assert later. Then, the crux of the letter. Make sure that you set out in a sentence that you reserve all rights in relation to the contract. My once consider asking the party receiving the letter to acknowledge receipt. But the reservation of Rice doesn't have to be accepted. It's effective once it has been delivered to the recipient. So the reservation of rights puts a marker in the sand and is a crucial stage. But remember that just because you have reserved your rights in writing doesn't mean that they will, in fact be reserved. That's because country words or conduct may render any reservation of rights ineffective. So if you do or say anything which is contrary to that reservation, you may be taken to have waived your rights. Ah, Passover to Jen. Now to explain Maura about the concept of waver. Thanks, Helen. So when we talk about waver in the context of a breach of contract or an agreement, a talent said, What we mean is that a party has expressly agreed to abandon their legal right to do something on the key point for you to understand here is that it is possible. And actually, it's potentially very easy to unintentionally waiver right? This could be done by email or even verbally in conversation if you're not aware of what it amounts to. So let's take the example of a contract which expressly requires that goods will be delivered by a certain date on DH expressly says in the contract by which there is a term written out that that if those goods are not received by the date required, then the party who's receiving them has the right to terminate the contract and bring it to an end. So in our example, party has bean late in delivering the goods on the last few delivery dates. Often where there has been a breach and your relationship with the party, you will consider granting that other party some leeway or what we called for parents as a gesture of good will. And so you live with That's late delivery on a few occasions. But then it happened again and again, and you get to say the third or fourth occasion and you've had enough on started. Actually, you're going to terminate and find somebody else in this example. Unfortunately, your conduct in continuing to accept the goods when they were delivered late on those first few occasions could be considered to amount to you. Having waived, I agreed to abandon the right you have to terminate on the basis that it wasn't delivered on time. Now, whether there has been a waiver or not will ultimately be a matter for a court to decide. But it can really complicate her disputes on, make it debatable whether you even have the contractual right that you thought you did anymore or whether it has now been waived and you've lost it. This can be argued and maybe the case, even if your contract agreement has a clause that says only variations to the agreement that are made in writing by way of an amendment agreed between the parties are valid. So you have to be really careful about what conduct that you accept from the outset and think about what that might mean for you later down the line. If it continues, its very difficult. Once you have waived the right or in our example allowed the goods to be delivered consistently late to change your mind on DH, then try and terminate again. It will all depend on the facts of the case, and it might be if delivery is so late that you can argue that you have a separate right for them to be delivered within a reasonable brief period of time. Or you could terminate, but what you thought was a straightforward matter because you had an express right in your contract. Terminate could then become very complicated because you may have lost it now. That's not to say you shouldn't sometimes give the other side some leeway. After all, it is an ongoing commercial relationship, but it always makes sense to think about what the risk might be and to make sure that you protect your position by first making it clear, preferably in writing that your agreement to let the issue go on this occasion and accept the late goods on must not be considered a waiver of rights to strictly enforce the contract as you're entitled to in the future. So that is where Helen's reservation of writes letter really comes in. And it's important in our example. If you are concerned at the moment that you may have waived your right to terminate on earlier occasions from your conduct and you're confident that they were going to be continuing breaches in the future, it's still worth thinking about writing that reservation of lights net and now waiting on DH, then terminating follow the next breach. Another point that we should just make here is that what we're talking about in terms of being able to terminate, is where there is an express clause in the contracts. Think theirs in the following circumstances. In our example, if the goods are delivered late, you have a right to terminate. If you do no, have an express clause that provides for that, then it's going to be more difficult because it will go back to whether there has been a fundamental breach off the contract by the late delivery. That's a completely separate topic, which I'm afraid is outside of the scape of today's podcast. But if you are in that situation, it's definitely worth speaking to a legal advisor. Before you try to terminate. As I say, each case will be determined on its own specific facts. So if you're in that position and the consequences of getting it wrong or potentially costly, then do speak to a legal advisor. And remember what might seem like a small value contract for you, which you're looking to terminate might be a major contract for the other party on DH, so they might be more likely to fight if you have potentially terminated incorrectly or waived your rights. So think about what the impact might be from both your side on the other parties. Okay, so now we're going to move on and look at another legal argument, which is often raised in the early stages of disputes about the party's conduct. On that is the topic of a Stupples. Helen, do you want to explain what that is? Thanks, Jen. Yes, so what? Issa Stopfel. It's a legal doctrine, which means that in certain circumstances, a court won't allow a party to resolve from a statement or a promise made to another party. You're different forms of the doctrine, and it's been developed over many years through case law. But there are some common features. Central toe. All the stop ALS is the aim of preventing unconscionable conduct so broadly. The starting point is to identify whether Party A has represented to Party B that it will not insist on performance often other obligation or won't enforce writes that it has into the contract. So, for example, party might say, I'm not going to enforce that some of the contract during locked down all I promise not to charge you this month. If Party B has relied on that statement, then party, eh? Maybe stopped from going back on that statement by, for example, seeking to charge for that month, after all, or by seeking to enforce that tear of the contract during locked down. The courts have developed this legal doctrine to protect innocent parties, and it's not a right that needs to be set out under the contract. It's what we call a common law, right, like we saw with the ability to terminate for a paediatric breach. As I said earlier, there were lots of different forms of the stock. All. I'm not going to talk about all of them now, but I think it's helpful to outline one in particular. And that's promissory estoppel because that's particularly relevant for contractual disputes. Promissory, estoppel khun be used Where there is an existing contractual relationship. It prevents party, eh from enforcing a contractual right against B, where A has made a clear and unequivocal representation that it wouldn't do so. Representation doesn't have to be expressed, it can be implied. But partier must have intended the representation to have affected the legal relationship that it has with B and crucially, he must be able to show that it has relied on the representation to such an extent that it would be wrong to allow a to resolve from it. Usually party beacon show that it would suffer a detriment if a was to go back on its word. If established promissory estoppel provides a complete defence on will prevent Party A from enforcing that term of the contract. So I briefly explained what a stopper is. But why is it important? Well, the danger is that if fear the Parsi doesn't pay or fails to perform the contract, they may seek to rely on a stop all argument to defend any future claim for breach of contract. They may try to point to a statement or a promise made by someone in the business that said that they didn't need to comply with that obligation, and if they can show that they relied on that promise, they can avoid liability into that term of the contract. So this goes back to the point I was making earlier about reserving your rights. Even if a reservation of writes letter is sent, you could still be prevented from relying on those rights. If the other party to the contract can make out on a stop along argument, so is John has said, in relation to Waver. It's really important that once you've identified a breach that you are this in the business, don't then do or say anything which waive those rights or a stop shoe from taking action under the contract. Practically that will mean that you need to ensure those people in the business who continue to deal with that counts party are aware of the circumstances leading to the breach on the need to be careful with their words on their conduct to make sure that the ability to take legal action is not affected. If feasible, you may want to ensure that communication with that counts party is limited to one individual or to a small group to reduce those risks. You should also ensure the written records are kept of all such communications. Of course, if you are the party in breach, you stop or doctrine can be a really helpful tool to enable you to avoid liability. So it's both a blessing and a curse, but absolutely an important issue to be aware off in the initial stages of a dispute on our past back to Gen. Who is going to talk about initial discussions with the other side in seeking to resolve at his feet. Thanks, Helen. So we probably left you all really anxious about communicating at all with the other side on for fear that you're going to waive your rights or having a stop a large demon raised against you. That's not our intention. We definitely would encourage you, Teo engage with the other party to try and resolve the matter at the outset. But there is a way to do that which helps protect your rights in case you need to fall back on them. So, as Helen said, it's really important that the people dealing day today with Thie other side are aware of these issues on DH have that in mind when they're communicating, either directly in person or by email. But when they are communicating and they want tohave an open dialogue, there is a way that they could do that while shielding those conversations from any future leading legal proceedings on DH. That's done under what we call the without prejudice rule. So without prejudice, rule means that if you have had a conversation with a counter party where there is a dispute in the background, which you are trying to resolve by discussing the issue then so long as you've made it clear that it's honour without prejudice basis than that, communication cannot be used in any future court proceedings were referred to in court. So how do you make sure that you get that without prejudice? Protection? The key here is to ensure that when you have a discussion, you agree with the other side at the outset of that discussion that it is being held on a without prejudice basis. So that needs to be no more than I'd like to talk to you about this issue today. Please, can you confirm that you're happy for this discussion to take place on or without prejudice basis and all you need? The other party to do is say yes, I agree, or I confirm I'm happy with that. Hey, presto, you're them free to speak freely about the issues and how you might try to resolve them. If you are sending a letter or an email, the equivalent is to ensure that you have ideally written the top in bold the words without prejudice on Then in the email you, Khun, set out what the position is on what you are proposing to try and resolve this. Now, if you haven't done that and you have been sending communications, it may still be possible to stop those issues that were discussed or referred to being referred to in court. But you will have to show that those communications were part of a genuine attempt to settle the dispute on DH. Obviously, if you haven't marked the communication without prejudice, then there might be a more of an argument about that. If you have any concerns in this regard, again is best to speak to a legal advisor. One point that I should just add here is that if you are not communicating with the other side in attempt to resolve the issue, then simply marking something without prejudice will not make it so sadly so. Only use that where you are genuinely trying to have a discussion about how to resolve the issue that has arisen between you. If actually what you're trying to do is allow someone to deliver the goods in our example late, but reserve your right to terminate on another occasion, then that's back to Helen's point on making sure that you've done so under the record of a reservation of writes letter. Not without prejudice discussion. I hope that helps just a couple of points to consider before we wrap up. Helen, do you want to pick up on dispute resolution procedures? Sure, Yeah, thanks, Jen. So when she decided to take action, all the other parties indicated that it wants to pursue legal action. It's important to cheque whether the contract concerned has a specific process that the parties have agreed they need to follow in the event of a dispute. The's an onus dispute resolution or escalation clauses on. We touched on this briefly in the first episode of this podcast. Most contracts will have some form of dispute resolution resolution clause, and they can be really simple. So, for example, the parties agree that any disputes will be referred to an arbitrator or to the courts. Or they can be more complex, with different levels or tears of the action that parties need to take. They might typically provide for a dispute to be escalated from a relatively informal discussion through gradually more formal processes until the dispute is resolved at a basic level. That might mean, for example, that the parties agree to use a method of alternative dispute resolution to resolve the dispute, such as mediation, before referring the matter to the courts. It's worth just pausing there to explain a little bit more about the term mediation. It's a voluntary, nonbinding, private process I retrained. Independent person helps the party to try to reach their own negotiated settlement. It's by far the most commonly used form of alternative dispute resolution on it has a high success rate. We'll talk more about the different forms off a D R or alternative dispute resolution in a later episode of this podcast. Siri's effectively dispute resolution clauses set out the rules of engagement in any dispute, and it's absolutely essential to follow those rules when pursuing a claim. If the claws is clear, it will usually provide an enforceable obligation under the contract to manage the dispute in a certain way, on, the courts will be able to enforce the terms of that dispute resolution clause if one party fails to follow it. Having explained about dispute resolution clauses, it's off also just worth mentioning here. Jurisdiction and choice of law clauses. The governing law clause states the law that we're getting the contract because the name would suggest a jurisdiction clause stipulates where any dispute which arises in Connexion with the contract will be heard. So in contracts with an international element, both the governing law on jurisdiction claws are very important as it provides the parties with certainty regarding the location of the courts. That is designated to hear any dispute between the parties on DH, the procedural regime that the parties will need to navigate so as well as checking the dispute resolution clause in order to determine the way in which disputes have to be managed under that contract. It's also really important to cheque which courts are tasked with resolving any dispute on the law that will be applicable to that dispute if the parties proceed to litigation. Ah wow! Passover to Jen to pick up the concluding part off this podcast. Thanks, Helen. So one point that we just wanted to cover before we go is that whilst very mind all of the points that we've covered in today's podcast, you should take some time before you engage with the other side to consider what each party's key motivators and priorities are for you Is thisa key commercial relationship. You want to continue, or is this one world? Smartly, The relationship is at an end, and you're looking for an exit route. If it's a claim where you might be looking to recover money, is the other party likely to be good for that money if the matter was to ultimately end up in court? Or are they likely to prolong a dispute in orderto avoid payment in the short term? And look for a lower settlement? Are their key individuals involved who are part of the problem that you will need to get around? Understanding all of thes points will help you consider the best way of resolving the dispute and how to take the matter forward. If you don't know the answer to these questions, then the best thing to do is to try and have our without prejudice discussion early on with the other side to try and understand what is driving them as soon as you can, so that you can tailor your response accordingly, so long as that's done under the umbrella over without prejudice discussion, it shouldn't be used against you in any future court proceedings, and it will allow you to understand much clearer what it is you're dealing with and how to plan for it. So there you have it. There's some of the key points you should consider about your engagement with the other side at the outset of dispute. Now that you have your house in order in the next episode, we're going to consider what we call letters of claim and pre action protocols. These are the steps that the court will expect you to take and comply with before any claim is issued. A court we look forward to hearing from you then. But if there's anything you'd like to suggest in terms ofthe questions or comments on this podcast, please Drew dropped Helen or myself, a line we'd look forward to hearing from you.