When running a business, you will inevitably find yourself in situations where legally-binding contracts must be adhered to. This is irrespective of whether your services are primarily B2C or B2B. Contracts help set the foundation of an agreement – what are you legal obligations and those of your business partner or customer/client.
For B2B, contracts play a significant and important role. Say, for example, you offer marketing and advertising services to other businesses. What parameters are in place if they find themselves financially incapable or unwilling to pay you for services provided? How do you protect your business from unjust legal proceedings by current or former disgruntled clients?
Along with accounting for what must be included in a contract, and determining whether or not it is within your legal right to impose specific parameters, you must also be prepared for another factor: a contract dispute.
What is a Contract Dispute?
Simply put, a contract dispute occurs when one or several parties contest a section of a contract to which they are tied. Disputes may result either from issues with the initial contract prior to signing, issues developed with the contract after signing, or in response to an action that they deem in breach of the contractual agreement.
For example, a former employee could allege that the employer’s reasoning for termination was in breach of the signed employment contract. Similarly, a client could claim that your services did not meet those guaranteed under the contract they signed with you.
Once a contract is signed, it becomes legally binding. So if any party contests any aspect of that contract, it can be lawfully disputed. Some may lead to court cases, but many lead to mediated disputes away from the public eye.
Business Contract Mediation
Mediation is a common proceeding that occurs in order to resolve issues presented by two or more parties regarding a business contract. The mediation process relies on a neutral mediator; someone who is licensed to run mediations and arrive at a neutral, objective decision for the parties involved.
The parties participating in the mediation are permitted to have attorneys present, but it is often encouraged that the clients primarily speak for themselves. The parties will argue their points regarding the contract, the alleged breach, and so on. The results of the mediation will not necessarily result in one “winner.” Sometimes mediation may result in the parties on either side of the equation reaching an agreement that is beneficial to both of them. This, of course, is dependent on the nature of the claims and how much evidence supports one side versus the other as being legally in the right.
The six primary steps of business contract mediation are:
- Introductory remarks
- Statement of the problem/dispute by the parties
- Information gathering
- Identification of the problem at hand
- Bargaining and generating options
- Reaching an agreement
Mediations are usually timed, with the expectation being that each step can be covered in a timely and efficient manner; so those participating in the mediation need to be prepared and have all supporting evidence ready. An attorney can advise you on what to have on hand for the day of the mediation.
Regardless of whether you’re pursuing legal action against someone or someone is seeking legal action against you for an alleged breach of contract, you need to be prepared. Along with having internal response plans to such crises and being properly insured, you also need to seek the best legal advice and representation possible.