Commercial disputes can generally be described as any type of dispute within the business world. Commercial disputes may occur in the UK or, as is becoming more and more common, they may occur in a foreign jurisdiction.
Commercial disputes most commonly occur when one party claims the other is liable for a breach under a contract and the other party is denying liability. They occur in relation to contractual claims, recovering unpaid debt, personal injury and negligence.
Why do commercial disputes occur?
A commercial dispute can arise for many different reasons. For a true conflict to develop both sides usually have a genuinely different perception of the facts. The best example of this is a claim for breach of contract.
On many occasions the party which breached a contract is aware it had done so, but feels that the act was justified, whilst the other party thinks it was not. Consider the following illustration:
- A business enters into a commercial dispute with a supplier because it received goods that were unfit for purpose. The business must replace the goods and inform the supplier of the problem
- However, the business is so preoccupied with replacing the goods in a timely manner that it forgets to inform the supplier. The supplier is therefore awaiting payment and is completely unaware of the reason for lack of payment
- Once the supplier chases up the matter, the business responds with a sharply worded reply claiming the supplier is completely out of place
A commercial dispute such as this could easily be resolved through good-natured communication, but unfortunately many such disputes end up in court because both parties consider themselves legally right.
If you are part of a business, and a communication breakdown leads to a commercial dispute, it is crucial that a legal professional is consulted. Court action isn’t always necessary, and a commercial solicitor can attempt to help you end your dispute through arbitration first.
It is important to note that there are time limits in which action can be taken in relation to commercial disputes:
- For contractual claims, this is six years
- For personal injury claims, it is three years
If legal action in relation to commercial disputes is not taken within this time frame, it is "out of time".
Commercial disputes can be very complex and should you even anticipate that they are going to take place, it is essential that legal advice is sought at the earliest possible opportunity.
Proven experience has revealed that addressing and managing commercial disputes earlier reduces escalation of the disputes and you have a greater likelihood of reaching a sensible, satisfactory and commercial resolution.
Is litigation inevitable?
Commercial disputes no longer necessarily mean full scale litigation. There are various mechanisms available to secure an early resolution.
Alternative dispute resolution such as negotiation, mediation and arbitration are often preferable and if the matter does reach the Court, it will be held in a party's favour if prior attempts at alternative dispute resolution were made.
If a resolution proves impossible and court proceedings will become necessary, this can be an expensive, stressful and time consuming process and if you do not win, you stand a high chance of picking up the legal costs of your opponent.
It is necessary to think commercially about the merits of the commercial dispute and any damage to your reputation which may follow as a result of any negative publicity.
If your case has already progressed to the litigation stage, see our page on commercial litigation.
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