Contractual disputes are rife in the business world and can be extremely expensive, time consuming and stressful for those involved. What may initially appear to be minor, trivial issues can quickly escalate into something much bigger, serving to damage business relationships beyond repair or even threatening the inherent survival of a business. The key question for businesses and contracting parties alike is therefore how to avoid such disputes.

1. Watertight Documentation

Clear, concise written contracts and terms and conditions governing relationships with customers and suppliers can serve to minimise the risk of such disputes arising in the first place. The existence of clear and watertight agreements governing a business’ relationship with employees, shareholders and other contracting parties can effectively protect a business’ interests and alleviate any potential conflicts, preventing disputes before they arise. It would be prudent for any business to ensure that it has an effective documentary framework governing its legal relationship with other parties in this respect.

2. Legal Input and Advice

A long-term relationship with a reputable and knowledgeable firm of solicitors can form a strong foundation for seeking to avoid such disputes and managing them as soon as they arise. A competent solicitor will be well-placed to advise a business upon the drafting of effective terms and conditions which will act as the legal framework for any contracts a business enters into. A solicitor will ensure that such terms and conditions effectively govern the nature and interests of the industry with which the business is concerned.

Expert initial advice at the outset from a solicitor on what to do if you end up in a dispute can assist in effectively managing the same and ensuring that it does not escalate into something more complex and protracted. Putting in place an initial scheme to pre-empt such disputes can also serve as a useful tool for businesses seeking to avoid contentious matters. More specialist niche advice may be required for particular types of dispute such as financial mis-selling or professional negligence actions.

3. Effective Strategy for Dealing with Disputes when they Arise

Pre-empting such disputes with the above preventative measures can be a highly cost-effective use of legal expertise. An effective debt recovery strategy (a frequent source of disputes between businesses) and clear payment terms are also highly appropriate in such circumstances. Consulting a solicitor at the outset and taking the correct initial advice and approach can also serve to minimise costs and nip any dispute in the bud before it escalates.

A logical approach can certainly assist in avoiding unnecessary disputes, but it is important for a business to accept that some disputes are indeed inevitable. Disputes should be managed by negotiating a constructive, mutually acceptable resolution, rather than finding yourself in a “battle of principle” with the other side. The main priorities in this respect include the maintenance of a working relationship and minimising costs and disruption, in addition to obtaining of an acceptable financial settlement or agreement. It is always important to consider the commercial reality of the situation in addition to the more technical legal rules and regulations.

If negotiation does not succeed, alternative forms of dispute resolution exist to include mediation or arbitration. Effectively drafted agreements will include appropriate dispute resolution clauses serving to dictate how a dispute will be dealt with. Litigation should always be seen as an absolute last resort.

The reality is that such legal disputes will inevitably arise at some stage for a business. Such disputes can be very expensive, particularly if they reach the court stage. Such disputes can be prevented to a degree and effectively managed if the correct advice and steps are taken at the outset. If you feel you have been affected by any of the above issues then do not hesitate to contact us today in order to speak with one of our specialist solicitors in this field who will be more than happy to advise you on the grounds for making or defending a claim.