Collection in Commercial Litigation: Strategies for Business Debt and Contractual Disputes

Commercial litigation often start as disputes over contracts and devolve in payment issues. Legal remedies may be required in order for businesses to collect outstanding debts and enforce their contracts. In this post, the business attorneys at Thompson Legal discuss the legal collection methods used in Michigan business contract disputes.

Please note that this post is not exhaustive, and every situation is unique. In the event that you have questions about your specific case, it’s advisable to speak with a licensed attorney. Contact Thompson Legal to schedule a discovery call with a Michigan business attorney.

Breach of Contract

A breach of contract occurs when one party fails to fulfill its contractual obligations, whether by not performing as promised, delivering subpar goods or services, or not meeting deadlines. Generally, a party must prove:

• The existence of a contract between the parties,

• The terms of the contract require the performance of a certain action by the defendant,

• The defendant breached its obligation to perform, and

• The plaintiff suffered damages as a result of the breach.

A breach of contract claim is generally the strongest way to support your claim, as you are asking the court to hold the Defendant to something they already have expressly agreed to. Therefore, having a thoroughly crated contract is the best way to ensure your business is protected. 

Promissory Estoppel

Promissory estoppel is a legal principle that allows a party to enforce a promise even if there is no clear written contract. To succeed in a promissory estoppel claim, the party must show:

• A clear and definite promise,

• The promisor should have expected that the promise would induce reliance,

• There was a change in position due to reliance on the promise, and

• Injustice can be avoided only by enforcing the promise.

Unjust Enrichment

Unjust enrichment claims arise when one party benefits at the expense of another without legal justification. In litigation, this often involves situations where a party receives goods or services without paying for them. To substantiate a claim for unjust enrichment, you must prove:

• Receipt of a benefit by the Defendant from you, and

• Inequity resulting to you because of the retention of the benefit by Defendant.

Account Stated

Michigan law allows businesses to pursue an account stated claim under MCL 600.2145. An account stated claim asserts that there is an agreement between parties on a specific amount owed, even if there was no written contract. This type of claim is often used when there is a history of transactions between the parties. When preparing to rely on an account stated claim: 

• Document the history of transactions and the agreement on the specific amount owed.

• Comply with Michigan's legal requirements for account stated claims.

• Seek legal advice to ensure the claim is filed correctly under MCL 600.2145.

Conclusion:

In business litigation, understanding the various collection types related to contract disputes is essential for businesses seeking to enforce their rights and collect outstanding debts. Having a solid strategy and consulting with experienced legal professionals can significantly improve a business's chances of success in collecting what it is rightfully owed.  If you have questions about collections for your Michigan business, contact Thompson Legal to schedule a discovery call with an experienced Michigan business attorney. 

This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with a business attorney about your case Contact Us at (734) 743-1646 to schedule a consultation.