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Avoiding business disputes

The best way to avoid business disputes is to have written agreements made up-front, to ensure everyone is on the same page from the outset.

In our experience, many business disputes could have been avoided if the parties had thought about and agreed on how they wanted to deal with a range of potential situations early on in their business relationships.

A written agreement can help parties to avoid misunderstandings about the obligations, responsibility and liability of each party. In fact, the process itself can help to clarify what the business is all about.

And if something does go wrong, it gives all parties a source of truth to refer to if someone fails to honour their side of deal.

Top 10 tips to avoid disputes:

  1. Have a written agreement at the outset that outlines the goods and 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 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, $90 per hour) provide an estimate of the likely cost, 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 enquiries 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 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 a last resort.