Notice of litigation: Overview, definition, and example
What is a notice of litigation?
A notice of litigation is a formal communication that informs a party that a lawsuit or legal action has been filed against them or is about to be initiated. It serves as an official warning that legal proceedings are pending and provides details such as the parties involved, the nature of the claims, and any deadlines for responding.
For example, if a supplier sues a business for non-payment under a contract, the business would receive a notice of litigation outlining the claims and the next legal steps.
Why is a notice of litigation important?
A notice of litigation is important because it ensures that all parties are aware of legal actions and have an opportunity to prepare a response. It also helps businesses take timely legal action, such as hiring attorneys, gathering evidence, or attempting to settle the dispute before court proceedings escalate.
For businesses, receiving or sending a notice of litigation signals the beginning of a formal legal process, making it essential to review contracts, assess risks, and determine the best course of action.
Understanding a notice of litigation through an example
Imagine a construction company is accused of breaching a contract by failing to complete a project on time. The project owner sends a notice of litigation informing the company that they intend to sue for damages. The notice provides details of the alleged breach and the compensation sought, giving the construction company time to prepare a legal defense or negotiate a settlement.
In another scenario, a former employee sues a business for wrongful termination. The business receives a notice of litigation from the employee’s attorney, informing them of the lawsuit and the claims being made. This allows the business to gather records, consult legal counsel, and decide on a response strategy.
An example of a notice of litigation clause
Here’s how a notice of litigation clause might appear in a contract:
“In the event that either Party intends to initiate litigation regarding this Agreement, they shall provide written notice to the other Party within [X] days of filing the claim. Such notice shall include details of the dispute and the relief sought.”
Conclusion
A notice of litigation formally informs a party about pending legal action, ensuring they have the opportunity to respond appropriately. Businesses should take such notices seriously, as they mark the beginning of a legal dispute that may require negotiation, settlement, or court proceedings to resolve.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.