Disputes in business are common. Whether it is a minor disagreement between partners, or a vendor has an issue with payment, it is important to know what options there are for resolution.
A business contract can help prevent numerous disputes. However, if a problem remains unsolved, there are three main options for dispute resolution.
The importance of a business contract
Whether you have a partnership, a corporation or other business entity, the U.S. Chamber of Commerce discusses that having an agreement or contract signed by all the owners can help with business disputes. By outlining details associated with operations, profit and loss sharing, ownership percentage, the withdrawal of one of the owners or other arrangements, there tend to be fewer disagreements in general.
Another term outlined in many business agreements is conflict resolution. The owners may decide from the beginning that any dispute, whether with owners, vendors or clients, will go through a certain type of resolution strategies, such as arbitration or litigation.
Common dispute resolution options
According to the Harvard Law School Program on Negotiation, litigation is still a common way to deal with disputes. It is the most well-known option, and it involves the attorneys of the conflicting parties arguing their cases in front of a judge or a judge and jury.
Litigation takes time and money, which is why some companies choose one of the other methods. Mediation is the most collaborative approach, as a neutral mediator helps the two sides agree together.
Arbitration falls in between mediation and litigation. The neutral arbitrator acts as the judge and makes a binding decision after hearing the argument and evidence from both sides.
Depending on the specific dispute, one type of dispute resolution may be better than the others.