3 Common Business Disputes That Can Be Resolved Outside Courtroom



Disputes are an inevitable part of every business. However, not every dispute needs to be resolved through a bloody battle in the courtroom.

Disagreements between business partners or shareholders can be healthy if the resolution is not about harming the other party. It can pave the way for better strategy or improvement on existing approaches.

Some of the usual causes of disputes are:

  • Debate between shareholders
  • Customers unhappy with a product or service
  • An employee experiencing unfair treatment or unacceptable working conditions
  • Business partners, suppliers, or contractor disagreements over whatand#39;s specified on a contract

Both parties in any dispute can choose not to go through a regular litigation process. Aside from being more costly, it can cause ridicule and other repercussions if it goes through a public hearing.

Here are the following business disputes that can be resolved without having to go to a courtroom:

Contractual Disputes

Contractual disputes arise from a breach of contract. Regardless if itand#39;s unintentional, when a party fails to comply with whatand#39;s written in a contract itand#39;s considered a breach.

Some of the most common examples of a breach are:

  • Non-payment of goods and services
  • Unable to meet imposed deadlines
  • Unable to meet requirements in materials or services

The damages of contract disputes can range from a few hundred to millions of dollars. Disputes on multi-million dollar construction contracts can cause a severe negative impact on both parties.

The greater the value of monetary damages involved, the more time and effort is wasted. Disruptions are large-scale as well. Thus, contractual disputes must be avoided at all costs. Here are some tips preventing this:

  • While verbal contracts are considered binding, itand#39;s always best that all business contracts are written. It makes both parties accountable. In the event of a dispute resolution, a written contract can help identify which particular clause was breached. Written contracts also help determine which party did not fulfill their contractual obligation.
  • Miscommunication is the mother of most disputes. Even if itand#39;s written in the contract, both parties must understand every item. This helps prevent an unintentional breach, which never counts as a good defense in any dispute resolution.
  • To protect both parties, a dispute resolution clause should be included in every contract. Itand#39;s better to set this straight before any disagreements happen. For example, international arbitration should be specified in a contract between two business entities from different countries.

Employment Disputes

Employment disputes donand#39;t have to go through litigation. Open communication between the employer and employee can help in arriving at a resolution that benefits both parties.

Some of the common causes of this type of dispute include:

  • Employment discrimination
  • Salary disagreements
  • Unfair dismissals
  • Maternity leave disputes

Mediation is always the best option for employment dispute resolution. The process is done in private and all pieces of evidence of the mediation process are destroyed after resolution. The speed of the process is dependent on the availability of both parties.

With mediation, both parties have equal opportunities to present their side of the story in front of a third-party mediator. The mediator should have extensive experience in the industry and in handling employment disputes. This third-party remains neutral throughout the process, helping both parties to propound their cases.

Shareholder Disputes

Contrary to whatand#39;s popularized in TV and movies, shareholder disputes on large, multinational companies are extremely rare. This type of dispute is prevalent in small to medium-sized companies instead.

Disagreements between top-level stakeholders can end up in a shareholder dispute. Miscommunication and unwritten proposals are the usual factors that spark the flame. When such disputes happen both shareholders usually face the following consequences:

  • Denial of rights to provide inputs on management decisions
  • Reduction or denial of payouts for dividends
  • Assignment of intellectual property rights without documentation

Even before the dispute resolution process, the repercussion of engaging in a shareholder dispute is severe.

A shareholderand#39;s agreement is crucial in preventing any future disputes. The agreement should specify both the dividend payments and voting powers. As with any other business contracts, a clause on dispute resolution should also be written down.

Choose to Resolve Business Disputes in Peaceful Ways

Arbitration and mediation cause less disruption to both parties. Itand#39;s less costly and doesnand#39;t require a lot of time to arrive at a decision. For these types of dispute resolution, you need a third-party that is neutral. Noah Hanft from Fedarb is one such expert who has extensive experience as a neutral arbitrator and mediator.