Before you consider bringing a small claim in court there are certain preliminary steps that you will need to take, including sending the other side a letter before action. Not only is this a requirement of the rules of the court, but it is also a great prompt to show the other side that you are serious about escalating matters. This can help to prompt a response if one has been lacking. This guide provides a letter before action template that is customisable to your dispute, and information about the initial steps your business will need to take before starting a small claim.
Contents
- Letter before action template
- Starting a small claim
- What steps do I need to take before starting a small claim?
- What court rules do I have to comply with before I start my small claim?
- How soon after my letter before action can I start my claim?
- How soon after my letter before action can I sue in a claim for money from an individual (including a sole trader)?
- Suing someone who owes your business money
Letter before action template
What is a letter before action?
It’s a formal letter that must be sent to someone before you sue them. It explains what has happened, what you are claiming and warns that you are going to sue them. It’s also known as a letter of claim, a letter before claim or a pre action letter.
It’s a serious matter to threaten legal action against someone, so using this letter should not be your very first step when you find out there is an issue - try a less formal approach first to see if you can reach an agreement with the other side.
What is a letter of claim?
A letter of claim is another term for a letter before action. This is a final warning letter that is sent to someone before you take legal action against them in court. It explains what has happened, what you are claiming and warns the other side that you are going to sue them. It’s also known as a letter before action, a letter before claim or a pre action letter. In this guide, we refer to it as a letter before action.
Do I need to write a letter before action?
Yes, if you plan on starting court proceedings against someone. It is a requirement of the rules of the court (known as the Civil Procedure Rules) that you write a letter before action to the other side to warn them that you intend to start a claim in court against them. If you don’t send a formal letter before action to the other side before starting a claim and give them the opportunity to reply, you run the risk of being penalised by the court if you do go on to make a claim.
Writing a letter before action can also help you to settle a matter without going to court at all. This might be beneficial to your business because it can be expensive and time consuming to sue someone, even if you win.
When should I send a letter before action?
If you are considering suing someone, you should always send a letter before action (or claims letter) first. Whilst you don’t need to wait until you’ve exhausted all other options before you send your letter, remember that it is a serious matter to threaten to sue someone, so it should not be the first step you take when a dispute arises (eg because another business owes you money).
How do I write a letter before action?
Your letter should include a summary of the relevant facts, what you want from the other side (including how any sum of money is calculated) and how long you will give them to reply before you start your claim. Keep your explanations concise and include copies of any key documents that the other side will need to deal with your claim (eg invoices, contracts or terms and conditions that you will rely on).
For certain kinds of claims, there are particular things you have to include in your letter before action. Choose the letter before action template that is appropriate for your dispute:
1. Letter before action, debt claims (B2C) for small debt claims where the person you want to sue is an individual (including a sole trader)
2. Letter before action, debt claims (B2B) for small debt claims against another business (not including sole traders)
3. Letter before action, non-debt claims for small claims where you are asking for something different from money owed
Alternatively you can use this Small claims toolkit for a how-to guide and all the relevant template documents to assist you with a small claims process.
How do I use the letter before action template?
- Select the appropriate letter before action template (see above)
- Fill in the questionnaire to customise the letter to your dispute
- Download and sign your completed letter
- Send it to the other side, enclosing copies of any relevant documents (hint: we’ve included helpful guidance in the questionnaire to indicate what you’ll need to provide!)
Starting a small claim
What steps do I need to take before starting a small claim?
There are rules governing your actions before you start a small claim against someone. Failure to comply with them can cause delays to your claim and potentially cost you money. You must:
1. Read the rules on preparation that apply to your case and do what they say
- in all cases read the Practice Direction for Pre-Action Conduct; and
- depending on what your claim is about, you may also need to look at specific rules for your type of claim. These are called Pre-Action Protocols. Not all types of claims have these rules, although notably claims for money due do.
2. Write a letter before action
This letter explains what has happened, what you want and warns the other side that you are going to sue them.
3. Try to negotiate and settle the matter between you
For further guidance about steps you can take, see our Q&A on Resolving disputes proactively. The Government has issued guidance emphasising this in light of the COVID-19 pandemic, strongly recommending that businesses avoid legal action wherever possible.
4. Consider obtaining legal advice from a lawyer
It is important that there is a legal basis for your claim. Many people bringing a small claim represent themselves instead of hiring a lawyer, but you are entitled to get legal advice and be represented at court by a lawyer if you wish. Citizens Advice offer free legal assistance if you are not prepared to pay for legal advice. Also see this list of free legal clinics although bear in mind that these free options tend to be aimed more at individuals than businesses. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.
Our Small claims toolkit contains a how-to guide and relevant template documents to assist you with a small claims process.
What court rules do I have to comply with before I start my small claim?
In all cases, you must make reasonable efforts to comply with the Practice Direction for Pre-Action Conduct. In summary, you must behave sensibly and try to cooperate with the other side wherever possible to resolve the matter efficiently. Suing someone should be a last resort.
Depending on what your dispute is about, you may also need to take reasonable steps to follow rules specific to your claim, called pre-action protocols. Most commonly:
1. Pre-action protocol for debt claims
Where you are recovering money owed to you by an individual or sole trader (it doesn’t apply if money is owed to you by another business).
2. Pre-action protocol for professional negligence
Where you are suing for professional negligence (eg suing your accountants or other professional adviser.
3. Pre-action protocol for construction or engineering
For construction and engineering disputes (eg suing your architect for a building project that went wrong.
4. Pre-action protocol for defamation
Where you are suing for defamation.
How soon after my letter before action can I start my claim?
You must give the other side enough time to respond to your letter of claim before you can sue them. Usually, 14 days is the minimum if the case is straightforward and no more than three months in a very complex case.
There are special rules for how long you must give in some types of claim, the most common of which is if you are suing an individual or sole trader for money they owe you (see below).
How soon after my letter before action can I sue in a claim for money from an individual (including a sole trader)?
How long this is depends on the size of your claim, what it is about and what the other side does:
1. Money owed by an individual or a sole trader
30 days from the date of your letter of claim.
2. Money owed by an individual or sole trader who is seeking debt advice
At least 30 days from the date you receive their reply form telling you they are getting debt advice, longer if they ask for it and it is reasonable.
3. Money owed by an individual or sole trader who has asked you to send them documents
30 days from the date you provide these documents, or (if later) 30 days from the date you receive their reply form if it says they wish to get debt advice.
If you have attempted negotiations, but you are unable to reach an agreement, you should give at least 14 days’ further notice of your intention to start court proceedings before you actually sue.
Suing someone who owes your business money
What must I do before suing someone who owes my business money?
If you are suing an individual or sole trader who owes your business money, there are specific rules that you need to follow, which are set out in the pre-action protocol for debt claims. These rules do not apply if you want to sue another business that owes you money.
In all cases, you must make reasonable efforts to comply with the Practice Direction for Pre-Action Conduct. In summary, you must behave sensibly and try to cooperate with the other side wherever possible to resolve the matter efficiently. Suing someone should be a last resort. The Government has issued guidance emphasising this in light of the COVID-19 pandemic, strongly recommending that businesses try to avoid legal action more than ever, reaching agreement where possible.
You must also send letter a before action; you can use one of our templates:
- Letter before action, debt claims (B2B) if you are suing another business
- Letter before action, debt claims (B2C) if you are suing an individual or sole trader
If you are suing an individual (including a sole trader) you must also:
- attach a standard information sheet and a blank copy of a reply form to your letter (you can find these at page 8 of the pre-action protocol for debt claims); and
- respond appropriately depending on whether the other side returns the reply form to you, and if so, what they say (see below).
Do I have to give someone time to get debt advice if they ask for it in their reply form?
Yes. If you have sent a letter before action to a consumer or individual and a small debt claims reply form is returned to you saying that the other side is seeking debt advice, you must give them some time. Allow at least 30 days from the date you receive the reply form, longer if they ask for it and it is reasonable to do so.
If they have asked you to send them any documents about your claims, you must give them 30 days from the date you provide those documents, or 30 days from the date you receive their reply form if they wish to get debt advice, whichever is later.
Do I have to agree to an instalment plan with someone who owes my business money?
No, but you should try to reach an agreement if you can, based on the individual’s income and outgoings.
If they have made a proposal for repayment of a debt in their reply form and you do not agree with it, you should give your reasons in writing.
For detailed guidance about starting a small claim, see our Q&A on small claims and letters before action.
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Before joining Sparqa Legal as a Senior Legal Editor in 2017, Frankie spent five years training and practising as a corporate disputes and investigations lawyer at leading international law firm Hogan Lovells. As legal insights lead, Frankie regularly contributes to Sparqa Legal’s blog, writing content across employment law, data protection, disputes and more.