Important to resolve commercial disputes
Cash flow is the life blood of business and so a dispute that stops or delays you getting paid can seriously hurt you.
Often these disputes arise from not agreeing at the outset on the contractual terms that will apply or not understanding the terms that have been agreed.
Having a good ‘‘Terms of Trade’’ which cover what will be done, when, for how much, when payment will be made and what happens if there is a dispute is a vital first step.
Professional advice can help you get a good contract sorted either a one off or a standard form for multiple use.
However, disputes can still arise and the longer these are unresolved the worse the problem gets as people’s views become entrenched or they simply lose interest in resolving the issue.
Discussing the dispute with the other party in a friendly but firm way that is supported by the contract, notes of discussions, copies of emails, and invoices at an early stage is usually the best way to resolve matters. Having good documentation, including signed and dated handwritten file notes, wins many arguments before they get started.
It is a good habit to get into to create file notes as you go. If a direct discussion doesn’t resolve matters early on, escalate the matter either to a person higher up or by getting professional help in resolving the matter.
That professional may recommend a more formal negotiation with the other party as the next step. With professional help the issues can be clearly identified and the supporting evidence presented in the most helpful way.
If that is not successful, the next steps would depend on contractual terms, but could be to bring in independent assistance, from an agreed expert or a conference of experts to a mediation, arbitration or court process.
An agreed expert involves both sides agreeing on a relevant expert to assess the arguments and reach a decision. This is most helpful when there is a dispute that both parties want resolved so they can continue to progress the commercial deal.
A conference of experts is where each side has their own expert and they discuss the issues and try to resolve them. They then report back on the outcome.
Mediation involves a person, who has no decision making power, assisting the parties to reach an agreement. This can be done without professional advice, but often involves legal assistance.
An arbitrator has the power to make a decision and often the parties are legally represented. It is a private process so there is usually no publicity.
The Disputes Tribunal can be used if the dispute is for $15,000 or less or up to $20,000 by agreement. It has the power to make a deci- sion. No lawyers are allowed in the hearing, but it is common to get legal assistance in preparing the case before the hearing.
For larger disputes a court process may be the most appropriate resolution.
The court can make various orders such as injunctions, preservation of property orders and decisions can be enforced in New Zealand and overseas.
What process you follow will depend on the circumstances and getting professional legal advice, both in drafting your contract, and in resolving any disputes is often very helpful to an early resolution of the issues while preserving the commercial relationships as far as possible.
If you have a legal inquiry you would like discussed in this column please email Alan on email@example.com
Column courtesy of Rainey Collins Lawyers phone 0800 733 484 or raineycollins.co.nz
How do you resolve disputes in your business?