Question

2. We see many business contract cases settle outside of the court. This does not happen only between businesses. Most corporate frauds sued by the government eventually settled out the court, which leaves many companies not admit any wrongdoing.

For the business contract cases, why do so many firms attempt to avoid litigation by settling contract disputes? With a well-written contract, is it easy to determine whose fault it is?

For cases started by the government, is settling without the final ruling a good practice?

Answer 1

So many firms attemp to avoid litigation by seting contract disputes because their reputation is at stake when they are dragged to court and sued by any party. Hence they prefer to go for an out of court settlement and settlebthe case amicably with the other party outside the court. This helps the companies to save their reputation in the eyes of general public and shareholders.

Yes, in my opinion it is easy to determine whose fault it is with a well written contract since a well written contract has all the terms and conditions clearly specified and there are no loopholes in it which can be taken advantage of by any party. Hence the fault is easily established in a well written contract and delegation of responsibilities is also clear.

No, it is not a good practice of settling without the final ruling because the ruling can go in favor of either party and the parties could be at loss if they settle without the final ruling since it puts their reputation also at stake.