Business isn't always a bed of freshly cut roses...


Date: 2 September 2009

In any relationship there is always the chance of things going sour. In business relationships, you really need to be prepared for the worst to ensure that you are not at unreasonable risk financially if it doesn't all work out. In practical terms, this means that you need to think about dispute resolution before you actually need to use it!

One of the first things you should think about when putting together a new agreement with a supplier, partner, client, or any other business for that matter, is how to deal with the relationship if it all goes terribly wrong. Some people might say that this is negative thinking, but it's actually about being sensible and well prepared.

This is especially important for business deals between close friends, as often both parties are pouring a lot of resource into the business and these close relationships are the last ones you would expect to end badly. Carefully drafted written agreements can help ensure that in the "unlikely event of a catastrophe" you both end out coming out of the relationship with as few bruises as possible.

The kind of dispute resolution topics a well drafted agreement might include are:

  • What happens when a dispute arises?
  • How does each business/person communicate their "issue" to the other?
  • How long has everyone got to work things out, and what's the process?
  • If it cannot be resolved easily, what's the next step? Arbitration? Mediation? Something else?
  • At what stage might the dispute go to court?
  • If it does, who pays costs, and in what circumstances?

You might be reading this thinking that sorting out dispute resolution clauses for your various business agreements probably isn't at the top of your 'to do' list. But it probably should be. You should give this high priority and make sure it gets done, now – dispute resolution could be an absolute saviour when you need it.

And you never know when you'll need it.

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