Almost every small business will encounter customers who are overdue on or are avoiding paying their bills. Failure to pay bills is a breach of contract on the part of the non-paying customer, and Connecticut courts provide a means to collect this debt. For controversies involving $5,000 or less, these types of matters may be brought before Small Claims Courts. There, such cases are decided by magistrates; the results are binding decisions that cannot be appealed to a higher court.
Simplified rules of evidence and procedure apply in Small Claims Court that are less complicated than those in regular civil courts. However, there is a number of technical requirements for bringing a case to Small Claims Court that may pose some difficulty for those who are unfamiliar with the system. One of these requirements is that the contract in question has met the statutory requirements to be enforceable. Generally, courts will not get involved with the enforcement of contracts that the law considers to be invalid.
An initial distinction between types of contracts is between those for “goods” and those for other things, like services and real estate. For instance, contracts for sale of goods for $500 or more must be in writing and signed by the parties in order to be enforceable. Conn. Gen. Stat. § 42a-2-201.
Contracts for the sale of things other than goods do not always have to be in writing. For example, oral contracts for the provision of services or the sale of goods for less than $500 are enforceable in the courts. However, many common types of contracts do have to be put in writing to be enforceable, including agreements regarding administration of estates, agreements regarding the debts of others, prenuptial agreements, sales of real estate, contracts for something to happen over 1 year from the time of agreement, and contracts for loans in excess of $50,000.
If you have an unfulfilled contract and are thinking about filing a lawsuit, we can help. There are many other considerations to take into account when deciding whether or not one of these matters is worth pursuing in court, and there are other alternatives to Small Claims Court that may be more cost effective in collecting outstanding business debts. Our office has experience consulting with businesses to decide the best course of action for collecting their outstanding debts, and we would be happy to speak with you regarding your issue any time!