An essential part of being a business owner is understanding how to best deal with problems.

Many issues can be handled using common sense, however small problems can sometimes escalate into disputes. Often the most costly part of resolving a dispute is the time spent dealing with it, instead of running your business. The steps below explain what to do if you are in dispute.

You may find yourself in conflict with a client, supplier, employee, tenant or landlord, or government agency. In each case how you manage the dispute may vary, however there are some key steps you can follow to handle the issue and maintain good business relationships.

Check your facts

  • Consider exactly how the dispute arose.
  • List the events leading to the dispute and highlight the key ones. Also include details of the issues you would like to be resolved.
  • If you have a written contract read it carefully to clearly understand the rights and responsibilities of each party. The contract may include a clause relating to a particular dispute resolution process that needs to be followed. Verbal agreements with supporting paperwork, such as emails, specifications and quotes with details of materials and timeframes, can also show evidence of a contract.

Talk to the other party

Many disputes arise due to misunderstandings; a conversation with the other party may clarify the problem and lead to a resolution. While a minor issue could be handled with a phone conversation, more complex matters are often better dealt with at a face-to-face meeting.

Points to remember when dealing with the other party:

  • Make sure the person you are communicating with has the authority to settle the dispute.
  • Always remain calm, polite and professional in your spoken or written communications. Avoid abusive or emotional language, or laying blame.
  • Plan what you are going to say. Set out your concerns as clearly as possible, making it evident that you are looking to resolve the situation quickly and in a professional manner.
  • Try to understand the situation from the other party’s perspective.
  • Make a list of possible solutions to the dispute for discussion with the other party – be realistic and prepared to negotiate.
  • Consider how achieving a particular solution (or not achieving it) will impact on your business – particularly in terms of time, money and future working relationships.
  • Listen carefully to what the other party has to say – you may find the difference between your position and theirs is not as significant as you initially thought.
  • Look for a ‘win-win’ solution that restores your business relationship. Make a list of realistic solutions to discuss with the other party.
  • After discussions with the other party make clear notes and record any outcomes that were agreed.

Formally write to the other party

If talking to the other party doesn’t work, the next stage is to communicate your concerns and the outcome you are seeking in a polite, professional letter. A letter serves two purposes; it provides the other party with an opportunity to resolve the dispute before further action is taken, and it provides evidence that you have attempted to resolve the dispute. This may be required if you need to use other means of resolution.

When sending the letter, attach copies of any relevant paperwork; such as a copy of your contract, emails, a list of specifications, quotes, invoices or other documents that outline your areas of concern. Make sure you keep a copy of all correspondence.

If you are still unable to resolve the dispute after talking and writing to the other party you may need assistance from a third party. Be cautious about resorting to litigation. Consider using an alternative method to resolve the dispute such as negotiation and mediation.

These services are usually cheaper and less stressful than going to court. If the dispute still remains unresolved, there are third parties who can help (see graphic on page two), including accessing our dispute resolution service.

Useful resources

Letter of demand template

Use our free template to save money by writing your own a letter of demand without the aid of a lawyer.

Letter of complaint template

Use our free letter of complaint template to let a supplier know about your issue and provide them with an opportunity to resolve the problem.

Dispute resolution service

We understand the value of your time and the importance of your business relationships. The faster disputes are resolved, the sooner you can return to running your business.

Our dispute resolution service (DRS) helps small business owners resolve business-to-business or business-to-government disputes. DRS is a voluntary process whereby disputing parties attempt to resolve their issues with the assistance of an impartial third party. As part of this service, our case managers provide general advice and assistance to all parties in dispute, helping them understand their rights and responsibilities, clarifying issues and exploring options to resolve the matter.

DRS gives you an opportunity to resolve disputes in a timely and cost-effective manner without needing to engage in a formal legal process. Early effective use of DRS can also have a positive effect on maintaining ongoing business relationships.

Although the option of taking your dispute to court is always available, it should generally be viewed as a last resort.

Find out more about DRS