Business and Commercial Disputes: A Practical Guide (England & Wales)

At a glance

• Limitation period for most contract claims: 6 years from the date the cause of action accrued, under section 5 of the Limitation Act 1980 — extended to 12 years for contracts made as a deed under section 8.
• Before you sue: the Practice Direction on Pre-Action Conduct and Protocols expects an exchange of information and a genuine attempt to settle; the Pre-Action Protocol for Debt Claims applies specifically where a business is owed money by an individual or sole trader, not by another company.
• Mediation: since 1 October 2024, the Civil Procedure Rules' overriding objective expressly includes promoting ADR, following Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416; most money claims up to £10,000 are also referred to the free Small Claims Mediation Service.
• Director liability: directors owe statutory duties under ss.171–177 of the Companies Act 2006 and can face personal liability for wrongful trading under s.214 of the Insolvency Act 1986.
• Where cases are heard: most commercial disputes proceed in the ordinary county court; higher-value or specialist cases (insolvency, IP, larger commercial disputes) may sit in the Business and Property Courts.
• Court fees: set out on GOV.UK (form EX50) and banded by claim value — always check current figures before issuing, as fees change from time to time.

What counts as a business or commercial dispute

A business or commercial dispute is any disagreement arising in a commercial context where one side believes the other has failed to honour an obligation, acted unfairly, or caused loss. It can involve two companies, a company and its customers or suppliers, shareholders arguing among themselves, directors accused of acting outside their authority, or business partners falling out over how a firm is run.

Commercial disputes are generally governed by a mix of contract law, company law under the Companies Act 2006, partnership law, tort, and intellectual property statutes, with procedure handled through the Civil Procedure Rules. Most disputes never reach a courtroom — they are settled through direct negotiation, a letter before action, mediation, or arbitration, all of which are usually faster and cheaper than litigation.

This guide covers England and Wales. Scotland and Northern Ireland have their own court systems and, in places, different substantive rules.

Breach of contract: the basics

A breach of contract occurs when a party fails to perform an obligation it agreed to under a legally binding contract, performs it late, or performs it defectively. Whether a breach lets the innocent party walk away from the whole contract depends on how serious it is:

• A minor (non-repudiatory) breach usually only gives the innocent party a right to damages — the contract itself continues.
• A repudiatory breach — one that goes to the root of the contract, or breaches an express term the parties agreed was fundamental — can entitle the innocent party to treat the contract as at an end and claim damages for the losses that follow.

Most disputes turn on what the contract's paperwork actually says, not on what either side remembers. Termination clauses, payment terms, notice periods, limitation-of-liability clauses, and any dispute resolution clause (a mandatory mediation or arbitration step, for example) usually decide how a dispute has to be handled before anyone can go to court.

How long do you have to claim?

Limitation periods matter because missing one usually bars the claim entirely, however strong it is on the merits.

• Simple contracts: six years from the date the cause of action accrued, under section 5 of the Limitation Act 1980.
• Contracts executed as a deed: twelve years, under section 8.
• Tort claims (including some intellectual property and negligence claims) run under different provisions of the same Act, and the trigger date can be later than the date of the underlying wrong in some cases — for example, where damage was not immediately discoverable.

The safest approach is to work out the exact cause of action and its accrual date early, rather than assuming a single "six years" rule covers every possible claim arising from the same set of facts.

Before you go to court: pre-action conduct and protocols

The Civil Procedure Rules do not let a claimant simply issue proceedings the moment a dispute arises. The Practice Direction on Pre-Action Conduct and Protocols sets out what the court normally expects before a claim is issued: exchanging enough information to understand each side's position, making a genuine attempt to settle, and considering alternative dispute resolution. A party that ignores these expectations risks a costs penalty later, even if it ultimately wins.

For debt recovery specifically, the Pre-Action Protocol for Debt Claims sets out a more detailed procedure — but its scope is narrower than many business owners assume. It applies where a business (including a sole trader or public body) is claiming a debt from an individual, including an individual sole trader. It requires a detailed letter of claim, an information sheet and reply form, and at least 30 days' notice before proceedings can start. It does not apply where the debtor is a limited company or LLP — business-to-business debt claims instead fall under the general Practice Direction described above, along with any other protocol that happens to apply (for example, the construction and engineering protocol).

Should you mediate first?

Mediation is worth trying in most commercial disputes. It is confidential, non-binding unless a settlement is reached, and often preserves a commercial relationship that litigation would destroy. It is also increasingly close to compulsory in practice, not just in principle.

Following the Court of Appeal's decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, the courts confirmed they can lawfully order or stay proceedings to require parties to engage in a non-court dispute resolution process, provided that does not impair the claimant's right to a fair trial. The Civil Procedure Rules were then amended with effect from 1 October 2024: CPR Part 1 now states that the court's overriding objective — dealing with cases justly and at proportionate cost — expressly includes promoting or using alternative dispute resolution, and that the court's active case management duties include ordering or encouraging its use.

Separately, since May 2024, parties to most county court money claims worth up to £10,000 are referred as standard to HMCTS's free Small Claims Mediation Service — a one-hour telephone appointment with a mediator, resulting in a legally binding agreement if the parties settle.

None of this means mediation is always the right call. It is less suited to cases needing urgent injunctive relief, cases where the other side is acting in obvious bad faith, or cases where a binding legal precedent is genuinely needed. But refusing to engage with ADR at all, without good reason, is a real costs risk regardless of who ultimately wins the case.

Director and shareholder disputes

Company law adds another layer to many commercial disputes, particularly where the parties are co-directors, shareholders, or a company and one of its own directors.

Directors owe a set of statutory duties under sections 171 to 177 of the Companies Act 2006, including duties to:

• act within the powers given by the company's constitution (s.171);
• promote the success of the company for the benefit of its members as a whole (s.172);
• exercise independent judgment (s.173);
• exercise reasonable care, skill and diligence (s.174);
• avoid conflicts of interest (s.175);
• not accept benefits from third parties (s.176); and
• declare any interest in a proposed transaction or arrangement with the company (s.177).

Breaching these duties can lead to a claim brought by the company or, once the company enters insolvency, by a liquidator on the company's behalf. Directors can also face personal liability for wrongful trading under section 214 of the Insolvency Act 1986 if they continued trading after they knew, or ought to have concluded, that the company had no reasonable prospect of avoiding insolvent liquidation or administration and failed to take every step a reasonably diligent person would have taken to minimise loss to creditors. Fraudulent trading and personal guarantees given to lenders or landlords are separate routes to personal exposure. A company's own governing documents — the articles of association, and any shareholders' agreement — often set out how internal disputes (a deadlock between two 50/50 shareholders, for example) are meant to be resolved before either side goes near a court. Where a dispute ends with a director leaving the board, the formal Companies House filing is covered in our guide on terminating a director's appointment (form TM01).

Intellectual property and unfair competition

Where a dispute involves use of a trade mark, copyright work, patent or design without permission, the Intellectual Property Office is the starting point for understanding what rights actually exist and how they are registered or protected — see our guide to the trade mark registration process for how UK trade mark rights are obtained in the first place. Remedies for infringement can include an injunction, damages or an account of the infringer's profits, delivery up or destruction of infringing goods, and legal costs. A cease and desist letter, setting out the rights relied on and giving the other side a clear opportunity to stop, is a common and often effective first step before formal proceedings.

England and Wales does not have a single, standalone law of "unfair competition" in the way some European jurisdictions do. Instead, unfair commercial conduct is addressed through a patchwork of specific legal routes — passing off, trade mark and copyright infringement, breach of confidence, and consumer protection legislation covering misleading trading practices. Which route applies depends entirely on the specific conduct involved, so identifying the right cause of action matters more than the general label used to describe the problem.

Where a commercial dispute is heard

If a dispute cannot be resolved without going to court, where it is heard depends on its value and complexity.

• County court, small claims track: claims up to £10,000 are generally allocated to the small claims track — the simplest and cheapest route, designed so parties can often represent themselves, and where the Small Claims Mediation Service referral described above typically applies. See our small claims court FAQ for how the process actually works in practice.
• County court, fast track or intermediate track: higher-value or more procedurally complex claims proceed on a track with fuller case management and disclosure obligations.
• Business and Property Courts: specialist business, property and financial disputes — including cases in the Commercial Court, the Business List, the Circuit Commercial Court, the Technology and Construction Court, and the Insolvency and Companies List — are heard here, in London's Rolls Building or in regional centres including Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle and Wales.

A straightforward unpaid invoice dispute between two small businesses is likely to stay in the ordinary county court system throughout. A dispute over a shareholders' agreement, a director's fiduciary duties, or a substantial intellectual property claim is more likely to end up in the Business and Property Courts.

What a claim costs to bring

Court fees for money claims are set out in GOV.UK's civil court fees guidance (form EX50). Fees for claims on the small claims track are banded by value; for higher-value claims the fee is generally calculated as a percentage of the amount claimed, up to a capped maximum. These figures change from time to time, so always check GOV.UK for the current amount before issuing rather than relying on a figure quoted elsewhere.

Beyond the court fee itself, legal costs vary enormously depending on the complexity of the dispute, its value, and how quickly it settles. A dispute resolved through correspondence or an early mediation may involve very little cost; a fully contested trial in the Business and Property Courts can run into substantial legal fees on both sides. The great majority of commercial disputes settle long before trial — which is one of the reasons the courts and the Civil Procedure Rules now push so hard towards early information exchange and ADR.

Practical steps if you're facing a dispute

1. Get clear on the facts before you do anything else. Write down what was agreed, what actually happened, who said what and when, and what loss has been suffered. Gather contracts, invoices, emails, meeting notes and any other documents that support your account — a tidy paper trail is worth more than a strong opinion.
2. Read the contract and any governing terms carefully. Look for termination clauses, payment terms, notice periods, limitation of liability, and any dispute resolution clause — a mandatory mediation or arbitration step usually has to be followed before court proceedings can start.
3. Try direct, documented contact before escalating. A calm conversation, followed up in writing, often resolves a misunderstanding before it becomes an expensive dispute. Be specific about what is wanted — payment by a set date, delivery of outstanding work, or a written correction.
4. Check which pre-action protocol applies, and follow it. A business debt owed by an individual or sole trader falls under the Pre-Action Protocol for Debt Claims; most other commercial disputes fall under the general Practice Direction on Pre-Action Conduct and Protocols. Either way, a properly drafted letter before action, giving a clear deadline for response, often produces a settlement on its own.
5. Consider mediation or arbitration before issuing a claim. Given how directly the courts now factor ADR engagement into cost decisions, refusing to consider it without a good reason carries a real financial risk later in the process, whatever the outcome of the underlying dispute.
6. Work out where a claim would actually be heard, and check the current court fee for that value of claim on GOV.UK before committing to litigation.
7. Take advice early if a dispute is significant — the choices made in the first few weeks (what to put in writing, whether to engage with ADR, which protocol applies) often shape the outcome far more than anything that happens once proceedings are issued.

This guide provides general information about business and commercial disputes in England and Wales. It is not legal advice and does not take account of your individual circumstances. The law described was accurate as at July 2026 and is subject to change — always check GOV.UK and legislation.gov.uk for the current position before relying on it.

Last reviewed: July 2026 by a non-practising solicitor · Next review due: July 2027 or on legislative change.