Legal Question in Business Law in Colorado

The answer depends on a variety of other questions. Did you have a contract that provides for attorney fees in the event of a suit? Did your contract provide for exclusive venue and selection of state law? Did your contract provide that attorney fees would be paid in the event of a dispute even prior to actually filing a suit? If you did not have a contract that covered this and a variety of other issues, that is unfortunate.

If she sues you and prevails, she has a right for damages. That is essentially the amount that would put her in the position she would have been absent your breach. So she could get amount for her out-of-pocket costs that she is claiming. She would also be awarded her costs for filing suit, such as filing fees, service of process, so on. As for attorney fees, unless you had a contract that provided for attorney fees to the prevailing party, those are not awarded unless this issue is covered by a particular statute.

As for small claims, that depends. If you had a well written contract you could have required that the action would have to be here in Colorado. If you have no contract it becomes considerably more complicated.

So, ultimately, it is up to you to decide if you want to pay these costs to avoid the threat of a suit. If you do, I would strongly recommend that you have a written settlement agreement which includes a release, non-disparagement, and other relevant terms. I would strongly recommend that you contact a business attorney to draft contracts for your business as the cost for that is tiny in comparison to the cost, time, and aggravation that is involved in any suit that arose because you did not have a clear agreement that protected your business. Good luck.

DISCLAIMER�This answer is for informational purposes only and discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney-client relationship.

The other attorney is right on point. You should incorporate these issues into all future contracts. The biggest expense (usually) are attorneys fees. If they are not specified in a business contract, they don't apply - unless there's something like fraud and a state statute, for example, provides for attorney fees in fraud cases. Doesn't sound like that's the situation in your case. Consult with an attorney in your area for specifics.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney