The Disadvantages Of Litigation
Litigation can be defined as a contest between and among persons, organization, and the State, which is authorized by law, in the court of justice, for the purpose of enforcing legal rights. In litigation process, a case which called suit or lawsuit is brought before a court of law. The parties who involved in the litigation are called the litigants which included plaintiff, defendant, applicant, petitioner or respondent as long as the trial is ongoing.
Litigation certainly has disadvantages. First of all, litigation is time consuming. Litigation process is a very complicated process. It needs to go through many steps and stages before the trial start. It takes long time to complete the pre-trial stages. According to the report written by Arthur (2008), Edition of the New York Times in 23 March 1983, an experienced lawyer was explaining to young potential lawyers what they can expect in litigation practice. He said, “You spend years and years in pre-trial motion practice. I smother the other side with papers and they smother me with papers until we wear each other out and the judge knocks my head against his head and we settle. It takes around three or four years."
Litigation is very costly and financially. Every citizen has the right to seek satisfaction for his or her grievances in the courts. The problem is paying the bills. A trial of a complex business case normally takes months; some have gone far for more than a year. Examples of the fees and expenses required to pay are lawyers’ fees, expert witnesses’ fees and others associated fees. Notably, the pre-action stage of proceedings can often be a very time-consuming and an enormously costly exercise. In addition, the uncertainty of the period of time that a trial might use will raise the expenses and fees time to time.
Other disadvantage of litigation is it is more benefit to wealthier party. Litigation is not a process of solving problems, but a process of winning arguments. Wealthier party is enable and affordable to hire an experienced and good lawyer to engage in the lawsuit. Judge and jury can be easily convinced by a good lawyer whom has strong convincing skill.
Besides that, litigation is unsuited to disputes involving technical issues. The fact that neither the judge or the jury may not have enough knowledge nor experience with the subject matter of the dispute between the parties. The expertise might relate to physicians, accountants, engineers, economists and others professions. Lack knowledge of jury and judge might cause resulting in wrong decisions and consequential appeals to higher forums.
Litigation is adversarial, which means less regard to fair solution. Court decisions might not acceptable to either party, result in disturbance of commercial relationship. Adjudication of court results in win-lose scenario and not a mutually acceptable decision. Hence, a party who is dissatisfied with the result may seek an appeal following trial.
Alternative dispute resolution, commonly referred to as ADR, is the collective term for the option that parties can resolve civil disputes, with the help of an independent third party and without the need for a formal court hearing. The independent third party will become the mediator between the complainant and the respondent, that is, the party against whom the complaint is being made.
ADR is a fast growing area within the justice system. In 1970s, ADR was reinvented in the US. More and more people became increasingly concerned that the traditional method of resolving legal disputes in the United States in the late 1980s and early 1990s. (The free dictionary, 2011) Since 1990, ADR became the fashionable development in England and Wales. Many Judiciary and legal profession took a very active interest in ADR. It is because the parties and lawyers and courts realized that ADR could always help them resolve legal disputes in a quickly and cheaply way than conventional litigation which is too expensive, too slow, and too cumbersome for many civil lawsuits.
By 1996, a significant push came from Lord Woolf's 1986 report 'Access to Justice', that identified the need for fair, speedy and proportionate resolution of disputes. This has been increased the importance of using ADR in the UK, as it has been judged that it has the capacity to increase the level of access to the justice system amongst the general public.
Those principles lay at the heart of the Civil Procedure Rules, which came into force in April 1999. The Civil Procedure Rules included references to ADR in rules of court and introduced pre-action protocols, with their emphasis on settlement, even before court proceedings are issued. Civil Procedure Rule 1.4(2) (e) now requires the court, as part of its responsibility to actively manage cases and encourage the parties using an ADR procedure if the court considers it appropriate and to facilitate the use of such procedure. (Delia, 2011)
There are many types of ADR. In general, there are conciliation, mediation, and arbitration. It included other types of ADR such as adjudication, ombudsman, early neutral evaluation, expert determination, Med-arb and Med-rec schemes.
Conciliation is a good first step in the ADR process. Conciliation involves an impartial third party, known as conciliator, who helps the people in dispute to resolve their problem. Conciliator will generally be a member of the trade association of which the company in question is a member. Conciliation is not legally binding upon the complainant. Therefore, the complainants are free to reject the decision and take further action to enforce their rights after the outcome of the conciliation process. Conciliation often used in disputes about access for disabled people to goods and services. It aims to secure a resolution in response to a particular incident of alleged discrimination which is satisfactory to the complainant.
The term conciliation is often used interchangeably with mediation. But, conciliator takes a more interventionist role than mediator in bringing the two parties together and suggesting possible solutions. Basically takes mediation a step further and gives the mediator power to suggest grounds for compromise and a possible basis for a conclusive agreement. Conciliation is an assertive, rights-focussed process that fundamentally aims to enable the complainant to exercise his or her rights in law.
Furthermore, conciliation is generally free to the consumer. As a result, this tends to be a good place to start.
Another potential alternative is mediation. Mediation, also known as conciliation, is the fastest growing ADR method in UK and Europe. It offers solutions beyond those that a court could ordinarily impose. Mediation provides a forum in which parties can resolve their own disputes and strike their own bargain, with the help of a neutral third party, mediator or facilitator. Mediator's job is to keep the parties talking and help them to move through the difficult points of contention instead of impose a decision upon the parties. The advantage of mediation is that the dispute is over when the parties reach agreement. They face no appeals, delays, continuing expenses, or unknown risks. Unlike litigation, which focuses on the past, mediation looks to the future. The parties can move forward again. Thus, a mediated agreement is particularly valuable to parties who have an ongoing relationship, such as a commercial, employment or neighbour relationship.
In arbitration, an impartial third party will hear both the respondent and the complainant in a dispute and makes a decision to resolve it. The outcome of arbitration is final and legally binding on both sides. Therefore, it is impossible to go to court if they are disagreeing with the decision. However, there is an exception for legal binding. If there are serious flaws in the arbitrator’s decision, or they have acted contrary to the rules in the Arbitration Act 1996, an appeal may be made to the High Court.
Arbitration is quite similar as litigation with it an essentially adversarial process and the fact that the ultimate decision made by third party is binding. However, arbitration is a step away from formal litigation. Arbitration is private rather than public. Hearings are less formal than court hearings, and some forms of arbitration do not involve hearings but are decided based on the help of documents only.
Examples of arbitration bodies are Advisory, Conciliation and Arbitration Service (Acas) provides free of charge arbitration for employment disputes and The Chartered Institute of Arbitrators (CIArb) provides arbitration for consumer and large-scale business disputes. Besides, there is also online arbitration in most cases requires a fee based on the claim value.
Ombudsmen exist in a number of fields, generally in relation to public such as the Local Government Ombudsmen or quasi-public bodies such as the Banking Ombudsman or the legal Services Ombudsmen. Function of ombudsmen is to investigate complaints in the relevant sector, for instance, maladministration by any government department. They may have powers to award compensation or only make recommendations to the body against whom the complaint is make out. The majority of recognised ombudsman schemes are set up by statute; others are voluntary non-statutory schemes set up on the initiative of the service sectors concerned. For example, services provided by insurance companies, banks and building societies are all covered by the Financial Ombudsman Service (FOS).
Adjudication involved an independent third party, adjudicator who is usually an expert in subject matter in dispute. Adjudicators are not bound by the rules of litigation or arbitration. Their decisions are often interim ones. It means that they can be finalised using arbitration or another process. Adjudication decisions are usually binding on both parties by prior agreement.
In relation to construction contracts, adjudication is a statutory procedure by which any party to the contract has a right to have a dispute decided by an adjudicator. It is intended to be quicker and more cost effective than litigation or arbitration. The right arises by virtue of the Housing Grants Construction and Regeneration Act 1996.
Early Neutral Evaluation (ENE) differs from arbitration in that the opinion non-binding and has greater informality. Unless the Parties agree, otherwise it is not subject to “due process", hence, it is more flexible. In particular there is no need for a trial-type hearing. Unless the Parties agree that it should be, the Evaluator may conduct investigations independently of the Parties, and make the recommendation based on those investigations without reference to the Parties. Parties should obtain legal advice when embarking on an ENE, but do not strictly need to be legally represented during the procedure.
In expert determination, third party will consider the claims made by each side and issue a binding decision. The third party is usually an expert in the subject of the dispute and is chosen by the parties. Like adjudication, the parties should agree at the outset to be bound by the expert's decision. It is most suitable for determining technical aspects of a complex dispute. A straightforward example of this method of ADR is sometimes used in boundary disputes. The parties agree to be bound by the decision of an independent expert, in the example, a surveyor who comes to a conclusion as to the correct sitting of the boundary.
Other types of ADR are Med-arb. As the name suggest, this is a combination of mediation and arbitration. The parties begin by mediating. If they fail to resolve the dispute by mediation, they have agreed in advance to submit the dispute to binding arbitration. In some cases the same person acts as mediator and arbitrator; in others a different neutral is brought in to arbitrate.
Med-rec is one of the forms of mediation in which the mediator gives the parties a recommendation for resolving the dispute. Mediation is conducted in the usual way, with the mediator encouraging the parties to reach their own agreed resolution. If they do not, they can ask the mediator to recommend a resolution. This recommendation can be accepted or not. If accepted by both parties it can become a binding settlement.
In my opinion, I am agree that Alternative Dispute Resolution (ADR) is a better alternative in a wide range of civil conflicts, such as commercial disputes, professional liability cases, personal injury matters, insurance problems and family disputes. It should be note that ADR is not a suitable solution for criminal disputes; these will almost always require a full court hearing.
In the aspect of civil conflicts, there are some common agreed benefits of ADR as compared to litigation that makes me believe that ADR is better option to litigation. First of all, Courts may have the risk to make a bad situation worse. Using ADR system, it can let both parties talk to each other. This let both sides increase their understanding to each other’s position. It helps each other to find a solution that both can live with. It can help preserve an ongoing relationship. This might be useful if the parties have a dispute with neighbour, ex-partner, child’s school, or landlord.
Secondly, there is a much wider range of outcomes with ADR than with courts. If the main aim of a party is an apology, an explanation, or a change in policy or practice by an organisation, mediation or an ombudsman investigation may well be more appropriate than court.
Next, procedures of ADR are more flexible than the court process. Most of the ADR procedures are without a formal hearing. For example, ombudsmen will investigate party’s complaint through letters and documents, mediators will usually bring both parties together for a face to face discussion and ACAS will try to negotiate a deal through a series of phone calls.
Besides that, ADR techniques can produce a win-win solution, however, litigation provides a win-lose situation. Mediators try to generate creative discussions about a range of options. They will try to end up with an agreement which reflects the best possible outcome for all involved, rather than just aiming for an acceptable compromise. Research on family mediation indicates that agreements reached through mediation are more likely to work out in practice, and to last longer, than those imposed by a court. Virtually all of the mediated agreements made in small claims cases are complied with, hardly need any enforcement action by bailiffs.
Furthermore, one of the ADR methods, ombudsmen has the power to investigate problems in depth. Like courts, it requires information to be provided by the organisation complained about. Unlike courts, they are free of charge to the user. Poorly performing local authorities and government departments can be named and shamed by the public services ombudsmen. Especially if the problem that faced by the parties are a symptom of much wider problems with a particular council or public body, then the ombudsman can investigate one complaint, and suggest wide-ranging changes in practice to make things better for everyone.
Last but not least, some ADR options provide a remedy where there are few other practical, affordable options; this could include issues such as neighbour disputes about noise or low-level anti-social behaviour, or complaints to the Financial Ombudsman Service about financial service providers.
It is not obligatory to seek legal advice by using alternative dispute resolution, but it is advisable. Litigation is to be viewed as a last resort with court having continuing obligation to encourage and facilitate settlement.
A contract is an agreement which legally binds the parties. A legal agreement is enforceable in court. The underlying theory is that a contract is the outcome of ‘consenting minds’ which means that each party being free to accept or reject the terms of the other.
An agreement by itself is not enforceable in court. There are six essential elements of contract are present before such an agreement may be enforceable in court. This included offer, acceptance, consideration, intention to create legal relations, capacity to contract and genuine consent of parties.
Offer and acceptance are the two main separate elements of contract. The origin of a contract will begin with the offer. The person who makes the offer is known as the offeror and the person who receives the offer is known as offeree. An offer can be defined as willingness to contract made with the intention that it shall become binding upon the offeror when it is accepted by the offeree. Contract will be formed with the unconditional acceptance of the offer. There must be a willingness from the offeree to enter into the contract with an offer.
An acceptance is a final and unqualified agreement to the terms of the offer. Once the existence of an offer has been proved, the court must be satisfied that the offeree has accepted. Otherwise, there is no contract.
There are three basic rules or elements of acceptance must be obeyed. Irst of all, an acceptance must be communicated while an offer is still in force. Acceptance is not effective until communicated to and received by the offeror. Communication can be either by words, writing or conduct. Silence cannot be a method of communication of acceptance. Refer to the decided case Felthouse v Bindley (1862), after previous negotiations had produced an agreed price, F (the uncle) wrote to J (the nephew) saying that, “If I hear no more about him, I consider the horse is mine at £30.75p." The nephew made no reply. When the horse mistakenly sold by an auctioneer, the uncle sued the auctioneer. The courts held that his action should fail as J had not communicated his intention to sell the horse to the uncle. There was no acceptance and no contract made between them. Silence shall constitute acceptance cannot be imposed by the offeror without the offeree’s consent.
Next element is acceptance must be unqualified and must be exactly the same as the terms of the offer. If acceptance is qualified, it either becomes a counter-offer or it is an acceptance subject to contract. In either case, there is no acceptance.
The last element is acceptance must be communicated by the offeree or by someone with his authority. An acceptance is not effective until the offeree communicates his agreement to the offerror.
In Powell v Lee (1908), P applied for the post of headmaster of a school. He was called for interview and the managers (D being one) passed a resolution appointing him, but they did not make any arrangement for notifying him. However, one of the managers, without authority, informed P that he had been appointed. The managers subsequently re-opened the matter and appointed another candidate. The court was held that P failed in his action for breach of contract since acceptance had not been properly communicated to him.
However, there are some exceptions to the rule of communication of acceptance.
The rule of communication of acceptance will be excepted where the offeror has waived the necessity of communicating acceptance, the offeree may accept by remaining silent. In Felthouse v Bindley (1862), the uncle, by his letter, had waived any right to receive a communication of acceptance. If the nephew had wished to enforce this contract therefore he would have been able to do so. Therefore, where offeror waives communication of acceptance, the offeree can enforce this contract if acceptance was through silence.
Exception of the communication of acceptance occurs when a unilateral offer has been made; the offeree need not communicate his acceptance to the offeror. Acceptance takes place on performance of the terms of the offer. In Carlill v Carbollic Smoke Ball Co. Ltd (1893), the defendant company manufactured a patent medicine, called a ‘smokeball’. In various advertisements they offered to pay £100 to any person who caught influenza after having sniffed the smokeball three times a day for two weeks. They also stated that they had deposited £1,000 at The Alliance Bank in Regent Street to show their ‘sincerity’. Mrs C used the smokeball as advertised, and contracted influenza after more than two weeks treatment, and while still using the smokeball. She claimed her £100. The company refused to pay it and claimed that an advertisement could not be constructed as an offer. The courts held that this advertisement was an offer made to the world and the contract is limited to that portion of the public who performed the conditions required under the offer.
One of the exceptions is postal rule. Postal rule can only be used if using the post is a proper and reasonable method of communication between the parties, the letter is properly stamped, properly addressed and placed in postbox, then acceptance is deemed to be complete immediately when the letter of acceptance is posted. If the above conditions are satisfied, then the acceptance takes place when the letter is posted even if the letter is lost, delayed or damaged.
In Adams v Lindsell (1818), L made an offer by letter to A requiring an answer through post within a certain time period. The letter of offer was misdirected and delayed in the post. A posted a letter of acceptance immediately. At the time of posting, A was still within the time period of answer required by L, but by the time the letter arrived, the time period specified for the acceptance had run out. L had thought that the absence of reply within the expected period for acceptance indicated that A did not want to accept the offer. L had sold the goods to another buyer. The courts held that acceptance took place at the time the acceptance was posted and A is successful in suing L for breach of contract.
This fact is supported by another decided case, Household Fire Insurance Co v Grant (1879). D (Grant) applied for shares in the company. A letter of allotment (the acceptance) was posted to him, but it never arrived. The company later went into liquidation and D was called upon to pay the amount outstanding on his shares. It was held that he had to do so. There was a contract between the company and himself which was completed when the letter of allotment was posted, regardless of the fact that it was in the post.
However, an offeror may protect himself from the postal rule by insisting that there be communication of acceptance. In Holwell Securities v Hughes (1974), H granted a co, the option to purchase land. He asked the co for “notice in writing". The letter sent by the co was lost in the post. It was held that the words “notice in writing" meant that the notice of acceptance must actually be received by the offeror before acceptance is valid. There was therefore no acceptance in this case and no contract.
William will succeed in his case which is he may not held liable for breach of contract by selling the plant to Joseph but not the Joshua. There are several reason supports William need not liable for breach of contract.
In William case, William wrote to Joshua on 3rd January 2011, offering to sell various items of plant and machinery for £30,000. The letter included the following statement: “Notice in writing of your acceptance of this offer must be received by me at 16th January 2011." On 9th January 2011, Joshua decided to accept and posted his acceptance. Joshua had called William personally but he was not in and therefore left a message with William’s mother, Stephanie confirming his acceptance of the offer. Joshua had since discovered that William never received the letter of acceptance and that Stephanie had forgotten to inform him of the telephone conversation. William had sold the plant to Joseph.
The offer from William to Joshua is exist and it is a valid offer. William wrote an offer letter to Joshua on 3rd January 2011, offering to sell various items of plant and machinery for £30,000. The letter of offer then has been received and read by Joshua.
The acceptance between William and Joshua is valid also. The letter of acceptance delivered by Joshua is within the due date stated by William. The letter that wrote by William state that: “Notice in writing of your acceptance of this offer must be received by me at 16th January 2011." On 9th January 2011, Joshua decided to accept and posted his acceptance. Besides that, according to postal rule, the letter of acceptance posted by Joshua has been requested so it is an appropriate and reasonable means of communicating between Joshua and William. In addition, the letter posted by Joshua is properly stamped, properly addressed and placed in postbox. Thus, the acceptance is complete even if the letter is lost in the post so that it never reaches the William. There was a contract between Joshua and William when Joshua posted their acceptance.
However, Joshua failed to obey one of the three elements. The element of acceptance state that acceptance must be communicated by the offeree or by someone with his authority. In William case, William’s mother, Stephanie is not offeree’s agent. Stephanie has no authority to represent William to accept the acceptance. Hence, although Joshua had called William personally but he was not in and therefore left a message with William’s mother, Stephanie to confirm his acceptance of the offer, there is no contract made since the acceptance does not receive by the offeror.
Besides that, the letter that wrote by William clearly state that: “Notice in writing of your acceptance of this offer must be received by me at 16th January 2011." William made the words ‘notice in writing’ as a communication of acceptance. The meaning of ‘notice in writing’ is that notice must actually received by the offeror before the acceptance is valid. This means that the letter of acceptance must be seen by William even if the notice was delivered but did not arrive. In this situation, postal rule had to be ignored. Hence there is no contract of sell as the terms of the offer. It requires acceptance to be actually communicated. This was supported by the decided case, Holwell Securities v Hughes.