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 aknowsley@rain­ey­

Col­umn cour­tesy of Rainey Collins Lawyers phone 0800 733 484 or rain­ey­

How do you re­solve dis­putes in your busi­ness?

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