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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
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Rapid Response Team: 0800 559 3500
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Common Commercial Disputes and How to Prevent Them

Author: Nicola Sharp  26 April 2024
4 min read

Disputes in business are, at best, an inconvenient distraction from the day job. Serious disputes can be particularly stressful, time-consuming and costly. 

Being aware of the sorts of disputes that crop up in the commercial world can help you mitigate the risk of these disputes and help you put in place processes to give you the best chance of success in a contentious situation.

Breach of Contract Disputes

Most external commercial disputes revolve around money or performance; a client hasn’t paid on time, or a supplier is late in their delivery. In any event, the cause of action is likely to be breach of contract. One party has not adhered to the terms of a binding agreement with the other party.

The sorts of disputes that fall into this category include:

  • Non-performance of an obligation.
  • Debt claims, late payments, or non-payment.
  • Breach of confidentiality.
  • Goods delivered are defective.

Preventing Breach of Contract Disputes

Unfortunately, you cannot prevent breach of contract claims. You cannot control another party’s actions, and breaches of contract will happen during your time in business.

However, you can make sure that you are in the most robust position to get recourse when breaches of contract do happen, and you can mitigate the impact of breaches of contract.

Professionally-Drafted Contracts

The most important step is getting strong but fair contracts in place. The contracts should cover all the risks that face your business, and set out clear obligations for both parties. It is much easier to establish a breach of contract if there is a clear clause or provision in the contract that a party has failed to abide by.

Clauses in the contracts must be deemed ‘fair’, otherwise they may be invalid. But ‘fairness’ is a difficult concept to pin down. For one client, 60-day payment terms may be fair. For another, anything more than 14 days may be unfair.

In order to cover all of your risks, and draft clauses which are considered fair in law, it’s worth asking professional lawyers to draft the contracts for you.

Keep an Organised File of Documentary Records

In any dispute, you need to prove your case with evidence. As you never know when a dispute will happen, you have to keep all of your documents in organised files, such as an electronic document filing system, or segregated email inboxes. 

Documents that are often required in a breach of contract claim are:

  • A copy of the contract signed by both parties.
  • Invoices.
  • Email exchanges.
  • Receipts.
  • Proof of payment.
  • Meeting minutes.

You need to be able to retrieve these documents, and it will save you significant time and effort if they are retained and filed in an organised manner.

Disputes Which are not Based in Contract

The other category of disputes you will come across are those that are not based in contract. These include:

  • Negligence Claims: For substandard building work, or poor advice etc
  • Misrepresentation: False statements of fact that induce the other party to enter into a contract
  • Fraud: Such as embezzlement, dishonest assistance, deceit
  • Passing Off: Infringement of your trademark or other intellectual property rights

Preventing Disputes Which are not Based in Contract

It is difficult to protect yourself against these sorts of disputes. When it comes to disputes over IP, you can protect yourself by registering any copyrighted materials as trademarks, and patenting any inventions you create.

For claims in negligence, fraud, and misrepresentation, your best protection is to give yourself as robust a claim as possible if you are the victim of any of these torts. The key to doing that is (again) keeping the best documentary records that you can. That gives you the evidence you need to prepare a case against the wrongdoer.

Keep records of conversations, minutes of meetings, email exchanges, even WhatsApp messages and other forms of communication. If you get into a ‘he said, she said’ argument about the facts, the documentary evidence that you keep can be the difference between winning and losing. 

Internal Disputes

Finally, commercial disputes can begin internally. These are disputes within the company such as:

  • Shareholder disputes, such as unfair prejudice against a minority shareholder.
  • Director disputes, or seeking to remove a director from their position.
  • Employment disputes: unfair dismissal, constructive dismissal, discrimination etc.

With these sorts of disputes, the best thing you can do is to have strong agreements and policies in place. 

Dealing with Commercial Disputes

1. Early Intervention

Informal communication with the other side can help to maintain the commercial relationship, and find a reasonable, negotiated solution.

However, if the parties are not able to agree by themselves, some form of early intervention can help. Mediation is a way to get an objective third party to help to facilitate a settlement. Or Early Neutral Evaluation can give you a non-binding assessment of the dispute.

Getting lawyers on board early can reduce your costs in the long run. A party may be willing to settle a dispute after they receive a letter of claim on letterhead from a law firm, or even once they know that you have instructed lawyers. We can also help you protect any assets you may need to enforce against, by apply for an injunction if necessary.

2. Document Retention

Once litigation is contemplated, then document retention becomes crucial. You cannot delete, overwrite or update documents. If you do, then you could be in contempt of court, and face a financial penalty or even a prison sentence in very serious cases.

You need as much documentation as possible to evidence your side of the story in the dispute.

3. Appoint a Lead Person to Handle the Dispute

Disputes are time-consuming and often become complicated. Ideally you would have a lead person in your company who has a handle on all the facts, and the steps in the litigation. This is usually an in-house lawyer, but if you don’t have a legal team, then appoint a director (or somebody else with decision-making powers) to oversee the litigation. 

This frees up the other personnel to continue with their day jobs, and makes the process of communication in the litigation more streamlined and straightforward.

4. Have a Strategy for the Dispute

When you are in the midst of a dispute it’s easy to lose sight of the end goal. Make sure you have a clear objective that you want to achieve: repayment of the debt, a level of damages that will cover your losses, a legally binding order to stop the other party from using a logo that is similar to yours. Whatever the objective is, make sure the business is aligned, and your lawyers are on board.

Litigation lawyers handle disputes every day, and can give you a steer on the strategy that is likely to achieve the outcome you want. It is important to follow a litigation strategy to use the tools and tactics of litigation to your best advantage.

Rahman Ravell - Experienced Commercial Dispute Lawyers

At Rahman Ravelli, our team of specialist lawyers can guide you through a dispute. We set a strategy at the start of the instruction, to give you the best chance of achieving your objective. We lead the process and take as much stress away from the dispute as possible.

Nicola Sharp C 09983

Nicola Sharp

Partner

nicola.sharp@rahmanravelli.co.uk
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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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