Managing Conflict and Disputes 

Differences between business partners are inevitable. It is crucial to ensure that such differences are resolved in a manner that is quick, amicable and cheap. Doing so will ensure that parties continue collaborating on good terms, without experiencing a significant drain on time and money.

10 basic pointers for dispute avoidance in Startups 

With the harmful effects of disputes in mind, we set out 10 basic pointers for dispute avoidance.

1. Communication is key

Parties should always provide each other with feedback, especially if they feel that something is not right. It is better to communicate constantly and to nip problems in the bud, as opposed to letting them brew and escalate. 

2. Do not focus on the problem

Focus on the solution instead. Difficulties between parties should be approached in a collaborative manner. Instead of focusing on the problem and blaming each other, the focus ought to be on finding a way to resolve the difficulty and continue nurturing the business relationship. 

3. Contracts should be clear and comprehensive

Contracts should set out the parties’ respective rights and obligations clearly and comprehensively. There will be little room for doubt and dispute when the terms stipulated in the contract are indubitably and accurately reflective of parties’ intentions. 

4. Agree clearly in writing

While contracts may be formed verbally or in writing, it is recommended that contracts be set out in writing for evidentiary purposes. Where there are no clear records of what was agreed upon (in oral contracts or otherwise poorly drafted contracts), the lack of clarity gives rise to a possibility of differing contractual interpretations, which in turn sets the stage for a costly legal dispute should parties fail to see eye to eye or compromise.

5. Read your contract

Parties should read their contracts before signing them, in order to address any points of deviation before setting their respective rights and obligations in stone. 

6. Hire a lawyer

If you cannot decipher your contract or are unsure about your rights and obligations, you should hire a lawyer to help interpret your contract and explain your rights and obligations. A lawyer is often the most effective and reliable tool that you can utilize to safeguard your interests. 

7. Uphold your end of the bargain

As long as the contract is clear and comprehensive, parties should have no room for dispute if they perform their contractual obligations in accordance with the terms of the contract. This would entail briefing your personnel properly, so that they may comply with any processes that may be set out in the contract. 

8. Have clear contractual provisions with respect to waivers

There may be times when you decide to waive a counterparty’s breach. Contracts should set out clearly the effects of each waiver, and how each waiver should be given. A commonly adopted position is to specify that waivers are to be given in writing. This reduces the prospect of inadvertent waiver of rights.

9. Implement a multi-tiered dispute resolution mechanism

The contract can set out that disputes are to be resolved through a multi-tiered dispute resolution mechanism. The initial steps of this mechanism may entail good faith discussions between representatives of each party. This may help in ensuring that disputes are resolved in an amicable manner and alleviate the risk of disputes being resolved through expensive means (e.g. litigation, arbitration).  

10. Be organised

Make sure that all contracts, as well as correspondences with respect to each contract, are organised and stored neatly. This ensures that these documents are readily available for your reference, when any doubts about your rights and/or obligations arises. 

Informal dispute resolution mechanisms

Business partners should agree on informal dispute resolution mechanisms before engaging formal dispute resolution mechanisms. Examples of informal dispute resolution mechanisms include:

● Consultations between the management teams of the business partners

● Mediation

Informal dispute resolution mechanisms are crucial in avoiding disputes, as traditional means of dispute resolution such as litigation and arbitration tend to be more adversarial and invasive.

The adoption of such traditional means of dispute resolution could place an even greater strain on the relationship between business parties, and could even spell the death knell for further engagements. Another benefit of informal dispute resolution mechanisms is that they are far less costly. Traditional means of dispute resolution tend to be costly, and could strain parties’ financial resources if the dispute proves to be long-drawn.

What next?

When it comes to legal basics, it can seem overwhelming at first. But, it doesn’t have to be. GLS offers a host of free Startup resources to help set you on your way. You can also browse our list of over 200 Legal Templates and Tools, to choose the products your Startup needs at each critical stage of business.

We also offer a wide range of subscription based Legal Support Plans created specifically for Startups who want a 360 degree service in creating their own virtual legal dept.

*The above content does not constitute, nor is it offered as, legal advice of any kind. GLS Solutions Pte Ltd is not a law firm and any support provided pursuant to this entity is not regulated legal advice or legal opinion.