Top 5 Most Common Business Disputes and How to Avoid Them

Top 5 Most Common Business Disputes And How To Avoid Them

When starting a business, you have to make sure to prepare. Especially if you’re new, you’re likely to make mistakes. This is a certainty unless you have someone experienced looking out for you.

Because of this, many businesses experience some type of dispute. Whether a personal or business dispute, these disagreements can escalate. Yet, how do you avoid business disputes?

To learn how to prevent these disputes in business and save your company, keep reading. Below are the top five business disputes and how to avoid them.

1. Contractual Disputes

Written contracts should contain all the key points of any transaction. It must be tailored to the needs of the parties involved. Being aware of the jurisdiction of the contract can help, as well as the laws governing the jurisdiction.

Have Clear Expectations

Before you sign a contract, make sure you both know what your responsibilities are and what you can expect from the other person. Putting the rights and responsibilities of each party in the contract can help avoid confusion or missed messages.

Have a Concisely Written Contract

Making sure the contract’s terms are clear and straightforward will reduce the chance of confusion and make it easier to settle any disagreements that may come up. When it comes to settling contractual issues quickly and easily, a well-written contract can make all the difference.

In business, a well-written contract is an agreement that makes both parties’ goals clear and accurate. It helps make sure that any disagreements will be settled quickly and fairly. A well-written contract should list the terms of the agreement between two or more parties. It must spell out the terms of the deal.

2. Partnership or Shareholder Disputes

Partnership or shareholder disputes over capital contributions are a common problem for businesses. It can even lead to significant legal disputes. To avoid these disagreements, businesses should ensure clarity. There must be an understanding between the parties involved. This should be done before forming any agreements.

Capital Contributions

A capital contribution in the business refers to the money or other assets that are provided to start or maintain the operation of a business. They are provided by:

  • individuals
  • businesses
  • other entities

Capital contributions are different from normal investments, such as a loan or stock purchase. This is because they represent ownership in the ongoing business entity. Thus, give the contributors proportional control or voting power in the business.

Identifying Disagreements

Identifying areas of disagreement in the expected parties’ contributions and determining how potential liabilities will be handled can prevent costly litigation. Companies should be sure to document all agreements in writing to record their expectations.

They must consider engaging with business dispute lawyers to review any contracts. Additionally, it is important to keep all contractual terms current and remain aware of any changes to any applicable laws, be it:

  • federal
  • state
  • local laws

It is also important to have communication protocols in place should any issues arise. All parties should be on the same page and act in good faith to prevent misunderstandings and potential litigation.

3. Employment-Related Disputes

Without proper communication and respect for applicable contracts and laws, business owners can find themselves amid a costly dispute with employees. Disputes between employers and employees can happen, and this can happen because of the following:

  • wages
  • unpaid overtime
  • termination
  • whistleblower complaints
  • discrimination

To avoid employment-related disputes, business owners must stay informed about potential risks. They must comply with applicable laws and contracts. Moreover, they must also have a proper communication plan.

It is also important to document all employee-related decisions and communications. Recording the times and dates of when activities took place must not be missed out.

Establishing a dedicated human resources team is also critical. This helps in ensuring that employment-related disputes are avoided. This is because HRs can help quickly and effectively deal with any issues that may arise.

4. Intellectual Property Disputes

Most businesses rely on their intellectual property to remain competitive. In some cases, misappropriation of intellectual property can spell disaster for the company’s operations. The five most common intellectual property disputes witnessed in business include:

  • copyright disputes
  • patent infringement
  • trademark violations
  • trade secrets
  • false claims

To avoid these disputes, companies should register their intellectual properties. Companies should also consider entering into nondisclosure agreements with their employees and any contractors. This helps prevent other parties from unlawfully gaining access to their intellectual property.

5. Customer or Client Disputes

Customer or client disputes can have serious consequences for a business’s reputation. To prevent these conflicts from arising, it is important to have clear processes in place. Communication is key in helping ensure customer satisfaction. That is why it is important to remain responsive and available to address any questions or concerns clients may have.

Establishing a clear policy for product returns and exchanges can help to avoid any litigation or court battles down the line. It also involves spelling out all terms and conditions in service agreements.

Offering high-quality customer service will also help to build trust and positive relationships between clients and the business. This entails quickly responding to customer emails and phone calls.

Further, staying on top of billing and payments is also important. This helps to ensure clients are being billed on time and accurately.

Understand the Most Common Business Disputes

The key to avoiding business disputes can be avoided through preventative steps. It entails understanding the most common disputes. That way, you can become better prepared to face any situation that arises within your business.

With the right protection, you won’t have to worry about facing costly legal proceedings. Take control of the potential disputes that may arise in your business. Learn about the resources available to help protect you from business disputes.

For more helpful articles aside from avoiding business conflict, visit our blog.

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About the Author: Nicole Ann Pore

Nicole Ann Pore is a writer, an events host and a voice over artist. Travel, health, shopping, lifestyle and business are among the many subjects she writes about. Through quality and well-researched writing, she informs and even entertains readers about things that matter. She is also interested in film critiquing and filmmaking. Giving all the glory to God, Nicole graduated Cum Laude from De La Salle University Manila, Philippines with a Bachelor’s Degree in Communication Arts.


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