Having a clause allowing you to claim legal costs back in the event of a dispute, may help avoid the pitfall of no costs recovery even if you win a case.
If you make a claim for less than £10,000 your case will usually be allocated to the small claims track, or as most people know it the small claims court. You may be successful in your claim but won’t normally be awarded your legal costs, aside from court fees, even if you had to take legal advice or needed to take a lawyer with you to court.
A clause stating that you can claim legal fees if you get into a dispute with one of your customers, suppliers etc, can help in this situation. It will not guarantee you a recovery, because the court still has a discretion, but you will stand a better chance.
If you already have terms of business then such a clause can easily be added. If you don’t, and you run your own business, then it’s time you got some. Not only can you have the clause I’m talking about here but you in most cases you can limit your liability to the price of the goods or services you supply. Without that, if you are a sole trader or in a partnership, you may face unlimited liability.
Should you be trading outside the UK, or even in Scotland, you need a jurisdiction clause to make sure the law of England and Wales applies to any contract you enter into. Otherwise you might end up having to bring or defend a case in another jurisdiction. This has happened to clients of mine who have found themselves dealing with the legal systems in Turkey and Poland. While it was an interesting experience it was extremely expensive and unpredictable.
