In a perfect world, all business relationships would work out exactly as planned but sadly we live in the real world and disagreements are never far away. Every year thousands of business disputes happen as customers, manufacturers, suppliers and even local authorities disagree over contracts, agreements and payments.
When a dispute occurs, you need to apply rationale and objective analysis to make the best decision for your business. This means compiling evidence and gaining advice on the likely strengths and weaknesses of your case, as well as the resources you wish to use to get a favourable result.
Five Steps to Handle a Business Dispute.
Resolving a dispute in the correct way will save your business money, and you, a great deal of stress. With this goal in mind we wanted to run down the five key steps in getting a favourable resolution to your business dispute.
1. Review the contract and your position.
To start, you need to assess whether you have a strong case or whether you are likely to be at risk of losing in the long run. To do this, you need to examine exactly what has happened as well as reviewing the relevant documents between the other party and yourself.
Do any legal agreements or contracts exist between you? If so then find the relevant clauses that apply to the issue you are in dispute over to confirm there has been a breach.
If you don't have a formal contract or agreement in place, do you have any other written correspondence or evidence of the business relationship? It could then be that the law suggests there is an implied contract in place from historical actions or transactions.
2. What outcome do you want?
As soon as you know the strength of your case, you should objectively consider the result that you want to achieve or are willing to accept as a compromise.
Business disputes usually involve a breach of contract and the party who suffers a breach is entitled to be placed in the same financial position as if the contract had be fully complied with. Therefore while you may have the right to be compensated for the full amount, you may be willing to accept a lesser figure or other compromise to achieve a resolution.
For example, if a customer cancels a contract without providing the required notice as they are selling their business. You may be open to allowing them to end the contract early on the condition that the new owner agrees to a similar contract with you.
You may also want to consider ongoing relations as part of what outcome you are seeking. Some businesses want to set an example to prevent other customers or suppliers breaking contracts and repeating the situation. Even though taking an uncompromising approach may be expensive in time and money.
On the flip side, you may have had a good relationship with the other party and so be open to find a more amicable solution and keep working with them.
You should always assess the dispute with your 'commercial hat' on and decide what course is best for your ongoing business whilst minimising the loss of time, money, and associated risks.
3. Assess the opposition.
Often businesses neglect to think of the other side in a dispute, but it can be valuable knowing their position and what they want or don't want to happen. For example:
4. The cost of a contract dispute.
With all the above in mind, you need to weigh up your options and how much each course of action will cost in time and money.
Your case prospects will factor into this, as with a strong case going all the way to court may be the best option. Additional costs like court issue fee, hearing fee etc. can be recovered as part of your claim when you win.
While on weaker cases making a compromised offer for a quick settlement may be more efficient.
Legal representation will also incur a cost, so it's important to discuss fees with your solicitor when considering legal action. Having the potential legal and court costs in mind will allow you to make an informed decision when looking at what you may recover through litigation.
5. A business dispute strategy.
Once you have combined your own research with legal advice, you can plan an approach that gives your business the best chance of achieving its desired outcome.
When it comes to disputes, a court hearing is often a last resort as there are many other solutions that are generally found before it gets to this point. Even if court proceedings are issued, settlements are usually achieved before an actual day in court is reached.
While you should always have a strategy and budget in mind, don't rule out altering this plan as the situation develops. Mediation, adjudication or compromise should only ever be ruled out after you have considered them thoroughly.
Each dispute is unique and the optimum way to resolve them is via careful and early analysis of the situation and prospects. This is why there is no substitute to taking legal advice on your dispute as early as you can.