Despite your best intentions, business disputes can happen – whether it’s caused by a supplier not meeting their obligations, a late payment from a client, or a disagreement with an employee or customer.

And while it can be tempting to say ‘see you in court’, no one wants a lawsuit on their plate unless it’s absolutely necessary. After all, litigation can be an expensive process that eats into the time you should be spending on running your business. Then there’s the damage a court fight can do to a once-productive working relationship or your business’ reputation.

So what are the best ways to settle the matter other than the courts? 

  1. Get the facts straight

When disputes arise, the first thing you should do is check your contract. Your contract should clearly state each party’s rights and responsibilities, including payment terms and timelines – as well as consequences for any breaches.

Next, start compiling documentary evidence of the key details of the dispute. This could be anything from meetings or correspondence you’ve had with the other party to photos, warranties and service details. 

  1. Negotiate with the other party

 Once you’ve got your facts straight, it’s time to talk to the other side. Remember to remain calm, polite and professional at all times – and be prepared to compromise. A win-win solution is often the best way of maintaining a good working relationship in the future.

Always take notes so you have a paper trail of what was discussed, and confirm any agreement you reach in writing.

  1. Formally write to the other party

 Unfortunately, talking doesn’t always work. The next step is to formally write a letter to the other party, outlining everything that’s led up to this point. The letter should include a summary of:

  • The key issues
  • What you believe the other party has done or failed to do (if relevant)
  • The required solution (including a specific timeframe for it to happen)
  1. Explore alternative dispute resolution

 Alternative dispute resolution (ADR) is a way of resolving business disputes without going to court, by involving a neutral third party. ADR options fall into two categories:

  • Non-legally binding methods (i.e. mediation)
  • Legally binding methods (i.e arbitration)

In mediation, a neutral party is appointed to help the disputing parties compromise and come to a mutually agreeable solution. As such, the mediator’s role isn’t to decide matters, but to facilitate discussion.

In arbitration, a tribunal hears and weighs up any evidence. The tribunal then reaches a decision known as an award that is both final and binding.

Prevention is usually better than cure

 The best method of keeping business disputes out of court is to not have them in the first place. A good commercial lawyer can anticipate business problems before they arise, helping you steer clear of expensive disagreements.

Cale opt Hoog is a small business lawyer at Sutton Laurence King Lawyers.

Dealing with a business dispute? Get the expert legal advice you need to resolve it by working with Sutton Laurence King. Call us on 03 9070 9810 or email info@slklawyers.com.au