Why Dispute Resolution Provisions Matter

Disputes are inevitable occurrences in any transaction or dealing. In the business specifically, disputes are relating to any disagreement between parties over a certain breach in an agreement. Although businesses try to avoid disputes at all costs, they are not immune to these interferences. Some of the most common disputes are between business partners, contractors and suppliers, as well as between employers and employees. 

A dispute occurs when one party fails to meet the demands, such as failure to deliver the goods and services on the appointed time, or when a certain payment for the product or service has not been executed according to the original agreement. 

However, whatever the reasons for the conflicts are, there are ways to resolve disputes or minimise the repercussions. One of the preventive measures is to work out a dispute resolution process. Consulting the expertise of a lawyer is also an excellent option because they can provide the right guidance and legal counsel to navigate the dispute.

What Are Dispute Resolution Provisions?

As your business begins to grow, your network will also expand. This means that you also need to draft contracts as you embark on a new venture with a business partner. Perhaps, you want to finalise negotiations with new suppliers and expand your customer base. When you make such decisions, it’s essential to acquire the right knowledge so that the contract is agreeable to both you and your client. 

Drafting a well-written contract, one that is beneficial and realistic to you and your client, will provide a solid ground for avoiding future disputes. This is why it is important to include a dispute resolution clause in your contract to protect not only your business but also your personal interest. 

But what are dispute resolution provisions, exactly? These are certain mechanisms and contract terms that primarily resolve disputes as non-binding or binding solutions. The clause also specifies the alternative processes, which are legally called the alternative dispute resolution clause. In the event of a dispute, these mechanisms are to be followed to prevent undertaking court matters. With this, you and your clients will avoid the cost of litigation and court dealings, and the parties are given control and a higher level of flexibility over the process. 

More importantly, an alternative dispute resolution clause involves three processes, namely, mediation, arbitration and expert determination. All these processes encourage participants to set the rules and conditions that best meet the circumstance. In Australia, the dispute resolution clause must be stipulated in the contract to avoid the hassle of going to court. 

Why Is a Dispute Resolution Clause Important?

Firstly, a dispute resolution clause will protect your business. It is a written understanding of you and the other party of what to expect in the event where a dispute may arise. Furthermore, the agreement will form as part of the contract, specifying the steps to resolve the conflict even before they escalate. 

A simple dispute resolution clause example in Australia could include a formal letter that must be drafted and sent to the other person or business to inform of a certain issue. If you are planning to retain your clients and preserve your business relationship with the other party, you can consider an alternative dispute resolution (ADR). 

There are several advantages to taking ADR. It can:

  • Save time and money
  • Help parties to deal with sensitive emotion or sentiment
  • Provide flexibility and informality
  • Preserve business connection
  • Offer a better and more effective solution.

What Are the Types of ADR?

  1. Mediation

Mediation is a common procedure of alternative dispute resolution. The process begins with a neutral third party individual, a mediator who will help both parties come to a beneficial agreement. One of the reasons why this is encouraged is because it is an efficient method of solving the dispute before both parties file for legal action. It is flexible and less complex and values confidentiality. 

While disputes between clients and business owners are usually impersonal, family disputes are more complicated because of emotional attachments or sentiments. What makes mediation a great option for effective family dispute resolution is that it’s non-coercive, and it allows the family to resolve their differences without going to court.

  1. Arbitration

This process involves a written document of the dispute, agreed by the parties and submitted to the arbitrators who will make a binding decision on the dispute. In choosing this process, the parties decide to settle the dispute in a private manner instead of going to court.

  1. Expert Determination

This option requires an independent third party who has extensive knowledge in the area of disputes. One thing that will make expert determination favourable is if you have included the process in the clause added in the contract. It is most useful in areas that are highly technical in nature, such as the construction industry. 

So what will happen if there is no dispute resolution clause? Without it, disputes will reach the court to draw the resolution process. If you go to court, you will have to spend time, effort and money to resolve the conflict. Preventing it and taking a collaborative approach by creating a resolution clause will allow for a better problem-solving process.

Why Is It Important to Have an Effective Dispute Resolution Process?

Disputes are damaging and detrimental to business relationships, as well as time-consuming and expensive. Hence, preventing disputes in the business will ultimately benefit your enterprise and the economy. 

How Madison Marcus Can Help You

If you urgently need dispute resolution experts, Madison Marcus can help you. Whatever the nature of your business, or whatever the conflict you have to resolve, our lawyers and professionals are ready to provide you with exactly what you need to change your situation. We can provide expert assistance at any stage of a dispute or negotiation. We can also advise you of the various possible courses of action, their advantages and disadvantages, and the associated legal costs. 
For all enquiries or for a free 15-minute consultation, contact us today.

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