Preventing disputes: a real way to help your business thrive
Prevention is better than cure.The adage is well known and applies to many situations, including dispute resolution.There are a great number of disputes that most likely could have been avoided altogether, had the parties had the foresight to discuss and set out clearly in writing exactly what they were agreeing to before signing any contracts.
A recent dispute I helped to settle at mediation is a good example: the parties had entered into a share purchase agreement and had effectively exchanged shares in one another’s businesses.Both had different and opposing ideas of what the company in which they were buying shares would need to accomplish for the deferred payment provisions to be triggered.This matter was neither discussed nor investigated further pre-contract signing, as both parties assumed that their own understanding was “correct”.The parties entered into the contract with little awareness of the other’s position and how the figures underpinning the accounting projections for one company had been calculated.
There ensued a bitterly fought dispute between them for over two years about what the parties believed they had bought and what they had expected to receive.Discussions in the midst of mediation uncovered that one company’s sales predictions had been based on a generous set of figures and that this, while defensible, had not been pointed out to the other side.The dispute settled after a few hours of mediation, but the parties had by that point spent a good deal of time and costs on the dispute, which might have been spent more productively in running their businesses, growing their brands, or in any number of other more fulfilling ways. Mediation was an excellent means of finally putting the matter to bed, but it could not undo the heavy financial and time cost of the dispute, not to mention the reputational damage and emotional impact it had had on the parties.
By discussing proactively before signing on the dotted line what it is you intend to achieve and what you understand to be each party’s obligations, you not only give yourself the best chance to avoid a dispute arising, but you also foster a better understanding of the other party’s interests, which may lead to a better working relationship.That enhanced relationship might, in turn, allow you to resolve any tricky issues that arise at an earlier stage and so avoid irrevocably damaging the relationship through protracted litigation.Yes, a longer pre-contract period is not something many people will relish, but that time will be well spent if it avoids a far greater and more costly period in dispute.
Mediation remains the rising star of the alternative dispute resolution world, for very good reason, but there is also a clear, as yet under-explored means of seeking to prevent disputes by way of pre-dispute resolution.Engaging in this preventative form of dispute management would require a fraction of the time and cost, and eliminate the reputational and emotional impact, that a subsequent dispute would entail.Such pre-dispute resolution discussions, whether with or without a solicitor or mediator, may offer a cheaper, less adversarial, more sophisticated approach to dispute management for companies looking for a better way to do business.
For specific advice on resolving disputes contact Lauren MacKenzie.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.