Company and commercial contracts are at the heart of most businesses. When a dispute arises, it can take time, expense and resource to solve. Increasingly contracts are relatively long term and contracting parties will strive to continue to co-cooperate even when there is an underlying dispute. The costs of termination can be high, and the costs of change can often be under estimated.
This is where mediation comes in. Mediation is quick, cost effective and provides a commercial solution. It can be suggested at any time, whether or not contracts include a clause for dispute resolution by mediation. An unreasonable refusal to mediate may result in adverse cost consequences for the refusing party.
Examples of common commercial disputes include:
- Manufacture and Sale of Goods
- Supply of Services
- Maintenance contracts
- Facilities Management contracts
- Outsourcing contracts
- Agency, Distribution and Franchise Agreements
- Licensing agreements
- Joint Ventures
- Partnership Agreements
- Shareholder disputes
Mediation can ‘nip in the bud’ a problem before expensive litigation has begun and parties have become too entrenched in their positions. Psychological research reveals that the more a person repeats their view (as they do in litigation proceedings), the more they believe they are right. Therefore an early mediation can prevent entrenchment of positions. It can also help to save relationships, which may otherwise fester when there are underlying unresolved issues. Commercially, mediation can obtain a quicker solution than going to court. This can help cash flow for claimants and also sometimes ‘a bird in the hand is worth two in the bush’ where a defendant is in precarious financial health.
Not everyone is willing to mediate at an early stage. Some will commence proceedings before instigating settlement discussions. It is rarely too late to mediate. There is a view that parties will make sound settlement decisions when they are fully appraised of the strength of the case they are bringing or defending, as a result of the production of documentary evidence through the court procedure. However, many litigants find that the resultant cost of this discovery process outweighs the benefits of the detail with which they are appraised, especially when a commercial, pragmatic, deal is sought.
