Strategic Letter Before Action in a Complex Commercial Dispute

This case involved a complex commercial dispute arising from a business arrangement concerning the supply of goods, in which substantial deliveries had been made, directors were excluded from the operation of a company, and issues arose regarding the transfer of shares. No formal written contract governed the parties’ relationship, which significantly increased the complexity of the dispute.

The matter escalated into claims for breach of contract due to non-payment of invoices, alleged unfair removal of directors, exclusion from business operations, and prejudice to shareholders.

A strategically drafted Letter Before Action (“LBA”) was prepared by our firm, setting out the claimant’s legal position, evidential basis, and remedies sought. The clarity and structure of the correspondence played a key role in defining the dispute and encouraging early engagement toward settlement.

Context

The dispute arose from a commercial arrangement involving the transfer and operation of a trading business. Although no fully formal written contract was executed, the parties proceeded on agreed commercial terms evidenced through electronic communications, including emails and WhatsApp messages, as well as their ongoing conduct.

Over time, substantial payments were made in connection with the arrangement, and the business was actively operated with third-party suppliers engaged to support trading activity. Operational structures were put in place on the basis of the parties’ agreed understanding of ownership and management.

The relationship between the parties later deteriorated, resulting in one party being excluded from the business. This led to disputes concerning ownership, control, unpaid liabilities, and the broader financial consequences of the breakdown in the arrangement.

Challenge

The primary challenge in this case was the absence of a clear, comprehensive written contract. The opposing party sought to rely on this lack of formal documentation to dispute liability and justify its actions.

Further complexity arose because key contractual terms had been formed through informal communications and conduct rather than a single definitive agreement. This created evidential difficulties in clearly establishing:

• The precise terms of the commercial arrangement;

• The obligations owed by each party;

• The financial contributions made; and

• The legal consequences flowing from the breakdown of the relationship.

In addition, there were outstanding commercial liabilities arising from the ongoing operation of the business, increasing both urgency and financial exposure for the claimant.

Solution

Our firm undertook a detailed review of all available evidence, including electronic communications, financial records, company documentation, and the parties’ course of dealing. This allowed us to put forward a stronger claim and clearly establish the existence of a contractual relationship between the parties.

A comprehensive Letter Before Action was then prepared, which:

• Clearly set out the existence of a binding contractual relationship arising from conduct and communications;

• Detailed the payments already made under the arrangement;

• Identified the agreed commercial structure and operational expectations;

• Addressed the wrongful exclusion of the claimant from the business;

• Set out outstanding financial liabilities arising from business operations; and

• Identified potential breaches of statutory and fiduciary duties.

The letter was carefully structured to present a clear and persuasive narrative supported by documentary evidence, making it difficult for the opposing party to meaningfully dispute the claim.

Given the strength of the legal and evidential position, the Letter Before Action also reserved the right to pursue insolvency-based enforcement action, including winding up proceedings, should the matter not be resolved.

Outcome

The clarity and strategic framing of the Letter Before Action significantly strengthened the claimant’s position and prompted early engagement from the opposing party. It assisted in narrowing the issues in dispute and created a structured pathway toward resolution without the immediate need for formal proceedings.

Key Takeaway

This case demonstrates the importance of a carefully drafted Letter Before Action in complex commercial disputes. By clearly setting out the legal position, organising complex factual material, and applying appropriate commercial pressure, an effective LBA can play a decisive role in resolving disputes efficiently and avoiding litigation