For business owners and managers, it never feels like there are enough hours in the day. It can be difficult when you find yourself in the throes of a commercial dispute or having to pursue one.
In these instances, you need to know exactly what you’re facing, so you can deal with the problem quickly and cost-effectively. In this article, we’re going to answer the question of what a commercial dispute is, as well as help you understand the actions you can take.
What is a Commercial Dispute?
A commercial dispute is, for the most part, a disagreement that arises in trade or commerce. As such, a commercial dispute almost always involves an argument about money, whether owed or lost.
In short, a commercial dispute refers to a disagreement between two professional parties, and can refer to disagreements around:
- Quantity of goods
- Quality of goods
- Invoice and contract terms
- Non-payment of goods
And much more.
It’s safe to say if you’re facing a commercial dispute, you probably know about it. It’s also safe to say that if you feel you’ve not been treated fairly, you may want to consider taking action.
Identifying the Issue
In order to defend or pursue a commercial dispute successfully, you need to understand the issue it is based around.
If you’re defending a commercial dispute, this step isn’t too difficult, as a letter will land on your desk and the other party will highlight the issues as they see them. Still, you’ll need to take time to determine which you agree or disagree with.
Where you agree with an issue, such as a service not being provided, does the blame for that lie at your door? If, for example, you didn’t deliver the service because payment hadn’t been made, as per the contract, you may choose to dispute the claim.
If, on the other hand, you’re the one making the claim, again, you need to identify the issue at the heart of the potential dispute and decide whether that constitutes a strong enough legal basis.
For most businesses, this is where you’d want to get in touch with a solicitor. Even if you’re comfortable that you can pursue or defend a dispute without legal support, it’s still wise to run your legal basis for or against a claim past a professional.
Once you’ve considered whether you have a legal basis to defend or pursue a claim, you need to consider the risk and reward of entering the dispute.
Often, pride can make this decision very quickly. If you feel wronged or falsely accused, your instinct can be to enter the dispute and fight your corner. However, as every successful business person knows, these decisions need to be made with a clear head.
The goal is always to resolve commercial disputes for as little cost as possible, but you always have to be prepared for the fact you may have to go to court to reach a conclusion.
Litigation can be expensive, with it not being uncommon for legal fees to run into the tens of thousands. Of course, if your claim is over £10,000 there’s the potential your fees will be paid by your opponent should you win, but what if you lose?
If you’re considering a dispute for a small amount of money but the details of the claim or defence are complex, you may find the safer and more cost-effective solution is to explore a settlement option.
This is not to say you shouldn’t dispute a claim, there are, of course, situations where you absolutely should, but the choice should not be a gut reaction.
Pre-Action Protocols and ADR
If you do decide to pursue a claim, you’ll need to identify whether there is a specific type of pre-action protocol that you need to follow. Pre-action protocols can vary, but at their core, they are an opportunity to exchange information with the other party and look for a resolution without the need for court involvement
A common first step is to lay out the legal basis for the claim, along with an indication of what you believe the claim to be worth in a letter, which you’ll send to the other party. Depending on the complexity of the case, you may send an initial letter to indicate your intentions and a follow up one as you gather more details.
If you’ve received this letter, you’ll need to reply within a set time (usually defined in the letter) or you risk court proceedings being launched against you.
When replying you typically have two options. Sending a letter of response allows you to address each element of the claim and whether you agree or disagree, while a letter of settlement allows you to make a proposal to settle.
Whichever side of the dispute you’re on, if you think it might go to court, a good step is to look at Alternative Dispute Resolution (ADR), such as mediation or arbitration.
ADR can help you resolve a dispute without risking the high costs of litigation, and the fact you’ve attempted to reach a resolution without litigation is often appreciated by the courts.
If ADR isn’t successful and the dispute is for a sizeable claim, litigation is your final step and it’s time to get a solicitor involved (if you haven’t already). As stated, every commercial dispute is different, so there is no one-size-fits-all approach to litigation.
Of course, litigation comes with its own advantages. If you’re defending a dispute that has the potential to damage your reputation, litigation provides a public platform to refute the claim and be vindicated, should you win.
Litigation also provides the one thing that many people in disputes crave – finality. Short of appeal, the judgement given will signify the end of the dispute, with a winner and a loser.
Commercial litigation comes in many forms, and no two are alike. For that reason, and the fact that disputes typically arise over substantial amounts of money, it’s vital that you are confident in every step you take in the process.
That confidence comes from knowledge and experience, so we always recommend seeking professional legal advice.
If you’re considering a dispute or one has just landed on your desk, get in touch with the Glaisyers team to learn how we can help you.