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Understanding Contracts & Collections

UnderstandingContracts&Collections.jpgIf you are a business owner it is likely that you could potentially end up in small claims court at some time or another. Small claims courts are courts of limited monetary jurisdiction. It is used to resolve smaller disputes. The amount awarded in small claims court varies by state. In some states you could be awarded up to $2,000 while in other states you can be awarded as high as $25,000. Most states allow awards of around $3,00 to $5,000.
A common dispute that might end up in small claims court is a contract dispute. These appear frequently, as a company might have to pursue or defend a contract.
Contract disputes are divided into two categories. The first category are contract disputes with a participating plaintiff and a participating defendant. The second category are the simple collection matters.
In a collection action, there is a participating plaintiff, but the defendant is not participating. The defendant has no defense to the dispute. It is a simple way in which a plaintiff will advance an overdue bill. This is first discussed, and then contract disputes. 

During the collections action, the plaintiff is simply trying to advance the matter to judgement. After he or she has reached a judgement, they can collect debt through garnishment or levy.
This basically is just when one party to a contract is seeking to enforce the other party's performance. They must be able to prove that the other party is not following along with the contract.
You will have to prove that you and this other party had entered a contract. Then you will have to prove that you performed your end of the bargain with any written proof, receipts, statements, or copies of information that you have. You will also have to have an oral testimony. Then you will want to explain how the defendant has not paid this debt. If you had previously tried to reach out to the defendant about the debt they owe you, but they have not responded, you will want to point that out to the judge. It's more effective if you have a copy of proof. If the defendant does not even show up to court, then it is a good chance that you will win your case.
If you are the defendant in this situation, then you have the ability to defend a collections action. There are ways that you can minimize your liability. The defendant has a variety of factors that are actually in his favor.
The plaintiff will have to undertake a lot of work to collect the full amount of debt. After the plaintiff wins his or her case, they still will have to collect the debt. In many cases, collecting on the judgement requires more work and expense than winning the judgement in a small claims court hearing.
You will want to try to come to a compromise early with the plaintiff. The plaintiff will only compromise the claim for fast money.
You might want to express to the plaintiff that they are going to have to go through a lot of writing and work to prepare their claim. Remind them that small claims decisions are unreliable and that they are increasing their risk of loss. Explain how they will have trouble collecting.
Contractual Disputes are different from collections disputes. Collections is literally all about collecting, but a contract dispute is a disagreement over who breached the contract. The plaintiff and defendant will challenge each other on their facts, the contract, and provide information to prove their point.
A contract is legally binding exchange of promises or an agreement to deliver goods, money, services, and other consideration. This can be oral or written, but if you want to stand a chance in court, you are going to want to make sure you have that contract in writing.
An implied contract means that some of the terms are not written in words. There is also another implied contract which is implied in law. A quasi-contract does not require a meeting of the minds. According to Entrepreneur, " rather, it is a means for the courts to remedy situations in which one party would be unjustly enriched were she not required to compensate the other."
Finally, some contracts require that a contract be committed to writing and signed by the party against whom enforcement is sought in order to be enforceable. These are usually involved in contracts in consideration of marriage, contracts that cannot be preformed within a year, contracts that are for the sale of interest in land, contracts to pay the debt of another, contracts for the sale of goods above a certain value, and contracts in which one party becomes surety.
These are just the basics when discussing contracts. For more information about preparing a contract case, the collection of loans, security deposits, and cases to recover back rent, check out the source below.
When it comes to the legal issues involved with contracts, Palacios Law Group knows you may have a lot of questions. We are always just a phone call away when you are in need of legal advice!
Source: Entrepreneur 

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