A proactive approach to managing business disputes

Every business experiences its fair share of bumps in the road. Whether it’s a disagreement with a supplier, a customer refusing to pay, or a clash with a business partner, conflicts can quickly escalate into bigger problems if not handled properly. The key isn’t to avoid disputes altogether—that’s simply unrealistic—but to manage them in a smart, proactive way.

At Lawyerlink, we believe that having a clear approach to resolving disputes is key to keeping your business running smoothly and protecting your reputation. This guide will walk you through the steps of identifying potential conflicts, preventing them from escalating, and choosing the best path for resolution, whether through negotiation, mediation, or legal action. With the right strategies in place, you can stay in control and protect your business from unnecessary risks.

Taking a proactive approach to avoid disputes

The best way to deal with disputes is to stop them before they happen. While it’s impossible to avoid every conflict, there are steps you can take to reduce the risk and safeguard your business. Whether the issue is about a contract, a commercial lease, an unpaid debt, employment, intellectual property, or a business relationship, being proactive is your best defence.

1. Include crucial clauses in your contracts

A well-drafted contract is your first line of protection against disputes. Clear agreements lay the foundation for resolving conflicts before they escalate. Make sure your contracts cover the following:

• Payment terms
  

Set clear expectations on when payments are due, how they’ll be made, and what happens if payments are late.

• Scope of work

Specify exactly what services or products will be provided to avoid misunderstandings.

• Delivery deadlines

Include specific timelines and consequences for delays.

• Termination clauses

Ensure both parties understand how and when the contract can end.

• Confidentiality and intellectual property

Define who owns any IP produced and how confidential information should be handled.

• Dispute resolution clauses

Detail the steps to be taken in the event of a disagreement, whether that’s mediation, arbitration, or litigation.

Tip: Keep your contracts straightforward and easy to understand. Using plain language reduces the chances of misinterpretation and ensures that everyone is clear on their responsibilities.

2. Communicate clearly and often

Good communication can prevent small issues from turning into major disputes. Often, conflict stems from misunderstandings or assumptions, which could be avoided with open dialogue. Here's how to keep things on track:

• Set clear expectations

Make sure everyone involved knows their roles, responsibilities, and deadlines.

• Follow up in writing

After important meetings or calls, send a follow-up email summarising what was agreed upon.

• Stay in touch

Regular communication with clients, suppliers, and partners helps maintain relationships and catch issues early.

Tip: If conflict does arise, approach the situation calmly and work collaboratively to find a solution. Open, constructive conversations can often prevent problems from escalating.

3. Keep detailed records

Good record-keeping is vital when disputes arise. Being organised and having all the necessary documents readily available can make a huge difference in resolving a conflict.

• Keep record of key agreements

Save all signed contracts, delivery schedules, invoices, and terms and conditions. These documents show the responsibilities both parties agreed to.

• Document communications

Whether it's emails, meeting notes, or letters, keep everything. If conversations happen in person, make a note of it, including the time, date, and key points discussed.

• Gather financial records

For payment issues or financial disputes, keep copies of invoices, receipts, bank statements, and any evidence of losses.

• Track performance

If a partner, supplier, or employee isn’t meeting expectations, keep track of deadlines, deliverables, and any quality issues.

• Collect employee statements

If a dispute involves employees, obtain their written statements or reports to document the incident.

Tip: Use software to store documents and track payments in one place. Regularly back up your files, both digital and physical, to avoid data loss.

Early resolution: Settling disputes before they escalate

Disputes rarely come out of nowhere—they tend to build up over time, with warning signs appearing along the way. Recognising these signs and taking action early can make a huge difference in how the situation unfolds.

1. Spot the red flags

The first step in resolving a dispute is identifying when something isn’t right. By recognising early signs of conflict, you can step in and address the issue before it grows into a bigger problem.

• Changes in communication

If someone starts avoiding emails or calls, or their tone changes, it could indicate dissatisfaction.

• Missed deadlines or payments

Unexplained delays in payments or missed deadlines can signal deeper issues.

• Sudden disagreements

If a stakeholder questions previously agreed terms or becomes more combative in discussions, investigate the cause.

• Employee grievances

If employees express dissatisfaction, file formal grievances, or become disengaged, it’s important to address the issue before it affects morale.

2. Understand your legal position

Knowing where you stand legally is crucial before engaging in any negotiation or dispute resolution process. Understanding your rights, obligations, and the strengths and weaknesses of your position allows you to make more informed decisions.

• Review your contract terms

Does your contract contain a dispute resolution clause? Are there specific conditions that dictate how disagreements should be handled?

• Know your legal rights

Research the relevant laws or industry regulations that may affect your dispute. Consulting a legal professional early on can help you interpret these rules.

• Evaluate your claim’s strength
  

Based on the facts and evidence you’ve gathered, how strong is your position? Are there any weaknesses the other side could exploit?

Tip: Before any conversation with the other party, ensure you fully understand the key issues in dispute and what a realistic outcome would look like.

Formal dispute resolution: When to take things further

When informal efforts don’t resolve a dispute, it might be time to consider more formal methods. If the other party is ignoring your attempts to find a solution, or the dispute is significantly affecting your finances or daily operations, taking legal action may be necessary.

Choosing the right approach depends on the complexity of the issue, the value involved, and your relationship with the other party. Formal resolution options include mediation, arbitration, and litigation, each with its own advantages and challenges. Consulting with a legal expert can help you decide on the best path for your business.