This guide will help you understand the process and make an informed decision on whether or not to proceed with a small claim.

 There may be times when a situation arises where you give serious thought to making a small claim against an individual or company. However as a hard pressed business owner/manager the pressure of time combined with a lack of knowledge may prevent you from doing this.

The information contained in this guide is intended to help get you up to speed to understand the process and thus help you make an informed decision on whether to proceed or not

WHAT IS A SMALL CLAIM?

A small claim is one that is for an amount of no more than £5,000, in England and Wales, £2,000 in Northern Ireland and £3,000 in Scotland. A personal injury claim should not exceed £1,000. Furthermore it should be capable of being decided at a hearing lasting no more than a day.

To clear a commonly held misconception - there is no such thing as a small claims court. The county court uses a ‘small claims track’ to handle claims. This process is intended to be quick, cheap and easy with larger amounts being handled by a slower, more expensive and complicated system where a lawyer is required.

WHAT CAN I CLAIM FOR?

• Money owed by a business or individual
• Compensation for faulty goods  
• Compensation for faulty service such as by builders, garages etc
• Damage to property
• Road traffic incidents
• Personal injury

WHAT YOU SHOULD DO BEFORE MAKING A CLAIM

Court Action should always be viewed as the last resort and before any action is started you must make a strong attempt to settle the claim. This should always be done in writing clearly stating how much is owed, what it is for, efforts you have made and a warning that you will make a court claim once a reasonable deadline expires (a fortnight for instance). Make sure you keep copies of all correspondence. You will be required to show these to the court

As a guide ask yourself the following questions.

• Have I exhausted all other possibilities?

In addition to negotiating there are alternatives to the courts such as mediation and schemes run by industry ombudsmen.

• If I win will the other side pay me the money I am owed? If the other party has disappeared or is bankrupt a victory in court may not amount to much.

 You are also advised to read the leaflet: Making a claim? Some questions to ask yourself (Leaflet EX301)

HOW DOES MEDIATION WORK?

You may be able to sort out your claim by using mediation but only if the other party agrees. An impartial third party, called a mediator can help both parties to reach a mutually-agreeable solution.

However, sometimes even if you start a claim, the court might refer your case to a mediator. For more information about mediation, telephone the National Mediation Helpline on 0845 6030809, or look on the website of Alternative Dispute Resolution www.adrnow.org.uk

Community Legal Advice has also produced a leaflet which explains what the alternatives to going to court might be. Go to www.communitylegaladvice.org.uk.

HOW TO MAKE A CLAIM

A claim is started by filling in a claim form which is available from local courts, and from Her Majesty\'s Courts Service website at www.hmcourts-service.gov.uk.

The claim form will ask for details of the claimant and the defendant, the amount being claimed and particulars of claim.

If the details of the case are complicated, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

As the claimant, you are entitled to claim interest. If doing so this amount must be included in the claim form. For more information about claiming interest, go to Her Majesty\'s Courts Service website at www.hmcourts-service.gov.uk, and choose \'Information About...\', \'Claims\', and then \'Making a claim\'.

Some claims for a fixed amount of money can be started online at www.moneyclaim.gov.uk. Usually, claims will be issued, printed and sent to the defendant on the day the claim is submitted. Court fees for online claims must be paid by credit or debit card.

You are also advised to read the leaflet How to make a claim (Leaflet EX302)

Businesses chasing debt be it from an individual or another business are advised to read the leaflet

Debt recovery for businesses (Leaflet EX350)

This and other Business Guides on a variety of topics relevant to running a SME business can be found at www.acumenconsulting.biz/business-guides.htm

This article was first published on July 2009 and may not necessarily match current events or current opinions and views of Acumen Consulting Ltd. The information contained in this article is intended as a guide.