What should I do if I am involved in a business dispute? What kinds of legal action can I take?

Business disputes are inevitable parts of running a business. They relate to any kind of disagreement over the terms of an agreement that has been signed between two businesses or between an individual and a business. There are different types of business disputes, which means that various types of actions can be taken when you are in a dispute. While these disputes can be financially draining and irritating, there are ways to resolve them.

Common areas of dispute

Some areas of dispute are more common than others, so it is important for business owners to be aware of these areas to prevent them at the outset. Some of these areas include:

  • Employment disputes
  • Contractual disputes
  • Bankruptcy and winding-up

Ways to minimise conflict and dispute

Before taking any legal action, there are at least three steps that businesses can take to limit the amount of business disputes that they may encounter:

  • Set up policies and procedures: They can help govern day-to-day transactions and interactions with other businesses and individuals, so the possibility of being involved in disputes can be reduced.
  • Put everything in writing: Certain disputes arise due to a lack of documented business arrangements, especially when arrangements have been agreed orally. Putting everything in writing helps minimise disagreements on what the parties have originally agreed to. In addition to signed contracts, written records can also include email or instant messages.
  • Adopt and develop collaborative practice: Using a collaborative approach and encouraging settlement and negotiation (e.g., mediation and arbitration) rather than litigation not only helps to avoid the expense of courtroom litigation but also improves business relationships between the parties. 

Legal actions

If, at the end, the disputes have not been resolved, there are also a variety of legal actions that can be taken:

Key takeaways

  • It is always better to avoid disputes at the outset by taking preliminary steps.
  • However, disputes are inevitable and if they need to be resolved by legal actions, the types of legal actions that you will resort to will depend on the nature of the dispute and the amount of compensation that you wish to claim.