Best practice guidelines to help you minimise the risk of a business dispute At a glance
- There are several practical steps you can take to help reduce the risk of a business dispute.
- It helps to identify the most likely causes of dispute for your business, and have systems and processes in place to reduce them.
- Take legal advice on contracts and keep good records of all agreements.
- Make sure everyone concerned knows who has authority to negotiate contracts and make payments.
- Encourage open communication; the sooner you know about a dispute, the easier it is to manage it.
A business dispute could easily become a drain on your finances and management resources, and attract negative publicity. There are several steps you can take to minimise the risk of a dispute.
Identify potential risks.
Some transactions can be particularly prone to disputes, such as major supply contracts, IT contracts and construction projects.
Often disputes arise out of day to day activities, such as health and safety issues, employee disputes, intellectual property disputes and regulatory investigations. Maintaining good systems and processes in these areas will help reduce the risk of a dispute.
Review your contracts.
Your contractual documents and terms and conditions should be suitable for the transactions they cover and drafted carefully, especially in key areas such as payment terms, early cancellation and the process for handling a dispute.
Have separate checklists for each type of contract to make sure all the key contractual areas are covered, and provide guidelines for your business managers.
If you have international contracts, make sure they state that English law applies and English courts have exclusive jurisdiction, to avoid the risk of getting involved in a court case abroad.
Some business contracts can exclude or limit liability in certain circumstances. It’s worth considering whether you can do this and whether you should.
Make your terms and conditions count.
If you’re contracting with a party that also has their own terms and conditions, try to ensure that yours prevail.
Be clear who has authority.
Have a written policy that makes it clear which people in your company have authority to enter into and negotiate contracts, and who is authorised to make payments. Ensure the party you’re contracting with is also aware of this policy.
Keep good records.
Make sure you keep a copy of the signed contract and any agreed changes to it. If it was an oral contract, keep a contemporaneous note of the agreed terms, where and when they were agreed, and by whom.
It’s important to have a document storage policy (including electronic documents), so your employees know how and where to store them, and for how long.
Encourage an open culture.
If a dispute is likely, you need to know straight away. It’s important your employees feel able to tell you about any issue, so you can deal with it quickly.
Take legal advice.
You can minimise the risk of a dispute by ensuring you have comprehensive, properly drafted contracts, and taking advice on another party’s contract before you enter into it. Our experienced solicitors are ready to help with specialist, knowledgeable legal advice.
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