Most businesses will have to handle disputes at some point, be they with customers, employees, suppliers or competitors. Contrary to popular belief, however, most can be resolved swiftly and easily – as long as you know how to handle them.
Business contracts are there to avoid disputes. They clearly outline the requirements of all parties and stipulate what happens if the contract is broken. Yet there can still be grey areas within contracts, normally born out of subjective interpretation of the relevant laws.
Many contracts will detail procedures to deal with disputes. So at the first hint of any disagreement, the first port of call should always be to check the contract. Contacts also normally contain a termination clause outlining how either party can break the relationship.
It is vital to retain all correspondence and documents relevant to the dispute. If a third party, such as an arbitrator, is called in to try and mediate the case, they will need this documentation to create a full and accurate account of the dispute.
Businesses must act in accordance with the appropriate Code of Practice, issued by the British Standards Institution (BSI), when holding online and electronic versions of documents.
Unchecked disputes take up precious time and drain financial resources. So to prevent disagreements escalating, it is good practice to have a series of guidelines and procedures in place for dealing with any disputes. These are known as internal dispute resolution systems, and everyone in the company – from the legal and HR teams through to the board and all other employees – should be aware of them.
It is also important to regularly audit systems and adapt them as business, tax and other relevant laws change.
In-house resolution systems are especially useful for dealing with smaller or internal issues, such as disputes with customers or employees. For more complex disputes, or for disagreements with large outside parties, such as a main supplier, most companies will use outside expert advice as well.
If the internal dispute resolution systems cannot find a solution, the next stage is litigation. To try and prevent a case going straight to court – which is both time consuming and expensive – it is common practice to follow a pre-action protocol to encourage parties to settle, using some form of alternative dispute resolution (ADR) such as arbitration.
In most cases, it is the losing party that incurs the costs of the successful one, though in reality only around half of this is ordinarily recovered; the successful party may be nonetheless be accountable for significant legal fees.
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