What if someone violated a business contract and you don&#39;t have the money to take them to court?
<p>I'm in Australia. Legal costs are very expensive, can go up to USD $50,000.</p>

<p>What's the use of contracts if you can't take a contract violator to court? 
Any party is free to do anything.</p>

<p>Or worst, halfway down the line, you don't have any money left to pay your lawyers, and they leave the case.</p>

<p>Is this typical?</p>

<blockquote>
  <p>What's the use of contracts if you can't take a contract violator to court?</p>
</blockquote>

<p>A clear, thoughtful contract can be a deterrent to misconduct, and Australia is one of many jurisdictions where pro se litigation is allowed. Self-represented litigants certainly have to undergo a steep learning curve and are expected to comply with a code of conduct, procedural law, and so forth, but my point is that hiring a lawyer is not compulsory.</p>

<p>Even if for some reason the defrauded party declines to sue the tortfeasor (thereby forfeiting the recovery of the losses), there is a societal obligation to alert others about the tortfeasor's misconduct. Making the contract available to others facilitates alerting them on objective grounds so they don't become the tortfeasor's next victim, and it simultaneously helps for setting the record straight that the damages/losses were not one's own fault.</p>

<p>Without a contract, it would be more difficult for others get a sense of whether misconduct occurred at all.</p>

<blockquote>
  <p>Or worst, halfway down the line, you don't have any money left to pay your lawyers, and they leave the case.</p>
</blockquote>

<p>Hence the importance to litigate <em>in pro per</em> from the start. It is easy for a person retaining a lawyer to postpone (be it due to family obligations, workload, and so forth) his learning of the law. But that postponement only makes the client more vulnerable to his lawyer's subsequent withdrawal when court proceedings are midway: the client would have the dilemma of either finding another lawyer to resume the case --predictably at a higher cost--, or cram the learning curve in trying to keep up with the proceedings.</p>

<h2>Contracts mitigate risk - they do not eliminate it</h2>

<p>First of all, the "point" of contracts is that they set out legal rights and obligations for <strong>all</strong> commercial transactions. </p>

<p>Buy a cup of coffee? That's a contract. Go to the movies? That's a contract. Buy a house? That's a contract. Build 23km of motorway? That's a contract.</p>

<p>Now, when I buy a cup of coffee, I don't bother with a written contract because the risks in that contract are extremely low and I (or the vendor) am unlikely to sue for a breach because the cost of enforcement will be much greater than the damages.</p>

<p>When I build a motorway, I insist on a written contract and it will have a detailed dispute resolution procedure including such things as an ongoing dispute panel of independent experts throughout, a requirement to negotiate in good faith, mediation and arbitration all before anyone can go anywhere near a courtroom (except for injunctive relief).</p>

<p>People have freedom to contract under the law which means that they can choose the terms to suit the risks. Going to court is always a last resort.</p>

<p>I have a litigator friend who handles medical malpractice suits (usually as a defendant for insurance companies) and his rule of thumb is that you don't go to court unless there are more than a million dollars at stake - less than that you just write a cheque.</p>

<p>My rule in my business is if it's less than the local court level ($100,000) I'll sue you myself - if it's more than that I'll hire a lawyer. In 20 years of business, I've sued about 5 people and I've never lost. Of course, I have settled many, many disputes for less than I might be legally entitled to because the cost (in time, money and effort) of getting what I deserve is not worth it.</p>

<p>There are lawyers in Australia who work on a contingency basis, usually for negligence rather than contract claims, however, be aware that, in Australia, costs generally follow the event. So if you lose, your lawyer won't charge you but their lawyer will.</p>

<p>Now, if it's a consumer contract (less than $40,000, or for goods or services normally used in the household, or a motor vehicle) then the government has agencies who will take up the consumer's cause without them spending a cent.</p>

<p>If it’s a non-commercial contract then you should be getting insurance.</p>

<p>Don't know if they can do this in Austraila, but in the U.S., Lawyers will typically take payment from the settlement once the case is one (typically, losing the case means you must pay all legal fees in addition to punitive and compensatory damages).  In fact, it's more likely that a lawyer won't take a good case if the defendant (the guy getting sued) is broke than the plaintif (the guy getting sued) even when the case is a slam dunk win because there's no money in it (Lawyers often say "You can't get blood from a stone" in this situation, as just as you can't get blood from a thing that does not have blood, you can't get money from a person who has tons of debt).</p>

<p>Additionally Lawyers are free to take a case Pro-Bono (means they're doing this out of the supposed "goodness of their heart" and not for money. Though many cases with big media attention tend to get Pro-Bono just for publicity).   Additionally, if you are in a Union, part of the membership means you have protections from Union Lawyers, should you need it.</p>

<p>There are also alternative dispute methods, such as arbitration (Many of the court shows featuring a celebrity reality-based judges are not actually judges on a bench, but arbitration officials (Judge Judy is a prime example.  Most of these shows will use a retired Judge so they can title the show Judge [Name] but arbitors need not be judges but officers of the court (a neutral lawyer counts).  What isn't shown on the show is that Judge Judy signed an arbitration agreement with both parties that says her finding is final if she makes a decision other than dismissal without prejudice and thus will be open to more legal problems in a real court.   In fact, the court room she works in is a studio set, and non-televised arbitration can be done in conference rooms).  Typically these are used in small claims (under $5,000).</p>

<p>Lawyers can also structure fees based on clients incomes and retainers, so if you're unable to afford a normal price or you're a frequent flier with that attorney, it's a bit easier on the bank account.</p>

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