Law And Order

Small Business Owner Toolbox – How to Avoid Lawsuits

Start-up… what comes to mind first?
Cash flow, bootstrapping, multitasking, guerrilla marketing and countless business pitches, right? When you start a business you’re probably more preoccupied with this kind of issues than potential lawsuits. Nonetheless, small businesses can and (more often than not) do get sued over preventable causes, with legal fees alone biting hard into budgets and returns – even more so when the case goes to trial.

The ripple effects of lawsuits go beyond hard numbers though as they are unpredictable, stressful, time-consuming and have the capacity to quickly erode your business’s reputation and/or credibility.
But, fear not, there are things you can do to significantly reduce the chances of ‘visiting’ the courtroom any time soon; if you want to get a fair idea on how to go about this objective, keep reading – this article contains useful insights on both the main and easily overlooked Have-Tos.

Reduce ‘Handshake Deals’ to a Minimum

Gentlemen’s agreements are (sadly) out of tune these days; you need to be aware of this no matter how small your business is. If you don’t put terms in writing, you leave room for misinterpretation and/or bias that can easily snowball into lawsuits.
Create a written, traceable document that details the key terms of any important transaction you make (i.e. price, payment methods, delivery dates, liability etc.). Make sure it clearly shows the involved parties have reached an agreement and keep up your end of the deal accordingly.
Get specialized help to draft personalized contract templates for the most frequent business operations – quick fixes such as generic or universal templates do not address unique issues that may arise between you and your providers and clients. Do the same in case the legislation changes or you need to insert additional/particular terms to the existing content.
In order to shelter your business from unwanted consequences, always ensure you work with contracts that cover the essential 4 C’s of legal agreements:

  • Clear – the language used has to be crystal clear. Get rid of vague expressions and be sure to state exactly what you mean, in a way that excludes any and all misinterpretations.
  • Current – it might seem obvious but worth mentioning nonetheless: avoid using outdated contracts; chances are the contents are no longer relevant to new business contexts.
  • Conciliation – another essential aspect: dealing with dispute resolution conditions. If there is no definite pathway applicable for resolving disputes, when problems appear you might end up in court.
  • Costs – including the costs generated by going to court in a specific section of your contracts might do a lot to discourage clients/providers to initiate or continue a legal battle when amicable resolutions could be possible.

If, for whatever reason, that’s no longer an option and you face an imminent trial, there are public liability lawyers in Perth that can help you bring the conflict to an end.

Use Sound Employment Policies

All businesses need to comply with employment regulations (think wage levels, working hours, social contribution etc.), safety requirements and laws meant to remove harassment and/or discrimination from the workplace.
Reduce the chances of an employment lawsuit by setting in place (and enforcing) HR policies that will enable you to stay compliant – remember that ignorance of the law does not exempt you from its reach. Moreover, this type of policies will also be helpful in setting a standardized method of dealing with complaints and breaches and a company guideline for delegation of decision making.

Clear Communication Can Prevent Problems

Things go wrong sometimes, it happens: supplies might not be delivered in due time, delays might occur for a myriad of different reasons; unforeseen events might affect the duration or execution of a project etc.
Explain the situation to all the affected parties and work with them to find a suitable solution. Follow up on all verbal conversations with explicit emails so that you’ll have a written record of agreed-upon actions readily available.


Chances are you won’t be able to make your business totally lawsuit-proof, even if you go by the book on all occasions. You can, however, take extra steps to prevent predictable contingencies and establish a legally solid document base so that you can minimize the impact in case you ever get sued.

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