How to avoid business disputes

Many disputes arise out of businesses not taking the time to document clear agreements in writing. A written agreement can help parties to avoid misunderstandings about the obligations, responsibility and liability each side has to the other from the start. A written agreement is also useful if something does go wrong, it gives the parties something to rely on and refer to if the other party fails to honour their side of deal.

Top ten tips to avoid disputes

  1. Have a written agreement at the outset that outlines the goods/services to be provided and the price or basis for calculating charges.
  2. Always read written contracts before signing them. If you sign a contract, you are likely to be bound by its terms and conditions. Do not rely on representations that are made by the other party as to the meaning and effect of the contract.
  3. Where possible have both parties sign the agreement so that there is documentary evidence of acceptance of the terms of the agreement.
  4. Ensure that all terms, including payment terms, are included in the agreement prior to providing goods or services. Do not attempt to add terms and conditions to tax invoices.
  5. If you are providing services that are to be charged on a time basis (for example, $x per hour) provide and estimate of the likely cost if possible and maintain detailed work sheets showing times and a description of the work done.
  6. Properly identify the person with whom you are dealing. Identify whether you are dealing with a company or an individual. Look behind the business name to identify who is operating the business.
  7. If you are operating a business ensure that your employees are aware of the scope of their authority to enter into contracts on your behalf.
  8. If you are dealing with another business make inquiries as to whether the person you are dealing with has authority to bind the company or the proprietor of the business. Identify the position title that the person holds within the business.
  9. If a service agreement is for a fixed term, read the contract to understand what rights or penalties apply if you have to end the service agreement early.
  10. If a dispute arises, communicate with the other party to attempt to settle the dispute. Taking a claim to court should be an option of last resort.

Quick Links