How to Settle A Dispute

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Before going to court, the people having a dispute must try to settle it themselves. In fact, the very first court form filled out by the person who starts the case says:

4. You must ask the Defendant (in person, in writing, or by phone) to pay you before you sue. Have you done this? If no, explain why not.

(See California Code of Civil Procedure, Section 116.320(b)(3)) Opens new window

A. Try to Talk It Out

If you are having a dispute with someone, try to talk about it with them. Perhaps, when the problem first came up words were said in anger, or decisions were made before all of the facts were known. It is possible that later, emotions will have cooled off or policies were made clear. It’s worth trying to resolve the dispute on a friendly basis.

  • Consider giving the other person some reason to work with you. If he or she owes you money, you might offer to accept less than the full amount, if it's paid right away. If you owe money, it may be worth paying a bit more than you feel you owe, just to end the dispute. Keep in mind that if the dispute goes to court and results in a judgment against you, the amount you owe may be increased by court costs Opens new window and interest, Opens new window and the credit reporting agencies will note the judgment in your credit record.
  • If there's no dispute about the amount you owe, but you simply can't pay the entire debt at one time, consider offering to make monthly or weekly payments until the debt is paid. (Even after the case is decided, the judge can authorize you to pay the judgment in weekly or monthly payments.)

IMPORTANT: Don’t wait too long.  Remember, there are laws that limit the time you have to file a case (statutes of limitations).Opens new window  If you think you are running out of time to file your case but believe you can still settle the problem, you can protect your right to sue by filing Opens new window your claim with the court, but not serving it on the other side.

B. Try to Mediate Your Dispute

Mediation is a process for resolving disputes informally. You and the other person or business in the dispute would meet (in person or by phone) with a third person – a trained mediator – who would attempt to help you to resolve your dispute. Usually, mediation of a small claims dispute lasts between 30 minutes and two hours.

  • Everyone should consider trying mediation. Mediation can really help if you have an on-going relationship with the person you have the dispute with. If you are suing a neighbor, business partner, landlord, or tenant, mediation may help you work out your problems and keep your relationship.
  • If you decide that mediation might resolve the dispute, ask a court clerk if the small claims court offers a mediation program. If it does, it may be free. If not, the clerk may know of a publicly funded program in your county. You can also locate a mediation program by calling your local bar association, looking in the business section of your telephone directory, or by calling the California Department of Consumer Affairs at
    1-800-952-5210. There is a list of local programs on the Department of Consumer Affairs website. Opens new window

C. Write a Formal “Demand” Letter

Before going to court, send the other person a short, clear letter demanding payment. For one thing, a “demand” letter will help you arrive at a settlement in as many as one-third of all disputes.  But even if you do not get a settlement, writing out your case in a formal letter will have given you a chance to practice telling your side of the story, which will help you later tell your story to the judge in a carefully organized way.

Your “demand” letter should be business-like.

  • Start by reviewing the main facts of the dispute. Include dates, times, and promises made. 
  • Include how you calculated what is owed to you. 
  • Ask for exactly what you want, when you want it, and where it is to be delivered.  For example, the full amount should be paid by 5:00 pm, Sept. 21, 2011, and delivered to your home address. 
  • Conclude by saying that you will pursue your legal options, including filing in Small Claims Court, if the demand is not met by the date you set.

    For help in writing an effective demand letter, click here. Opens new window

Keep a copy of all correspondence in a file or folder where you can find it later.

If you DO settle your dispute, write down what was agreed to.  Include:

  • The names and addresses of the people involved, 
  • A brief description of the “what,” “when” and “where” of the dispute that has been resolved, 
  • A statement of what the person giving up a claim is getting in return, 
  • The date the agreement is being signed, and 
  • The signatures of both people.

Keep a copy of the agreement in a safe place.


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