A business thrives on clarity and mutual understanding. When all parties agree on roles, deliverables, timescales, and costs, operations flow smoothly.
Whether a company supplies goods, services, or bespoke processes, success depends on stakeholders working in harmony towards shared objectives. However, even the most carefully planned business relationships can become turbulent when expectations change or communications break down.
Misunderstandings are an inevitable part of commercial life, and they frequently escalate into disputes. Consider this example scenario: Company A orders metal castings for manufacturing equipment from Company B, a specialist metalworking firm. The components arrive a week behind schedule, fail to fit the machinery as specified, and the invoice shows a figure that differs substantially from what Company A’s manager recalls discussing during the initial telephone conversation. When he contacts his counterpart at Company B to address these issues, he is met with flat denial. The supplier disputes the timeline, the specifications, and the agreed price. The resulting deadlock leaves both parties frustrated – and the business relationship strained.
Taking the first steps towards resolution
Sensible business leaders recognise that rushing to court at the first sign of disagreement is rarely the wisest course of action. The initial response should be direct, personal communication. A company manager or director should pick up the telephone and speak with their opposite number.
While email might seem efficient, it often comes across as confrontational regardless of the sender’s intentions. The written word lacks nuance and can easily be misinterpreted, whereas a conversation allows for immediate clarification, tone adjustment, and genuine dialogue.
A telephone discussion provides the opportunity to iron out misunderstandings before they calcify into entrenched positions. Even when the facts remain in dispute, direct conversation can often achieve a pragmatic compromise that allows both parties to learn valuable lessons and salvage the commercial relationship. This approach preserves goodwill and keeps future business opportunities alive – outcomes that litigation rarely delivers.
When to involve your solicitor
If direct negotiation fails to resolve matters, consult your solicitor. A qualified legal professional brings dispassionate analysis to emotionally charged situations. Your solicitor can objectively assess the strength of your position, examining the evidence, contractual terms, and applicable law without the personal investment that clouds judgment. This independent perspective is invaluable, particularly when pride, frustration, or financial pressures threaten to influence decision-making.
Your solicitor can then correspond with the opposing party, providing authoritative legal analysis supported by evidence. This formal legal communication often prompts the other side to reassess their stance. When faced with professional legal scrutiny, businesses frequently recognise risks they had not previously considered: potential contractual breaches, evidential weaknesses, or unfavourable legal precedents. Hard negotiation conducted through solicitors may lead to compromise and settlement.
While such agreements might feel grudging to both parties, they remain far superior to the alternative of protracted litigation.
Alternative dispute resolution options
Many industries and professions in Scotland offer alternative dispute resolution (ADR) mechanisms that provide efficient alternatives to court proceedings. Rather than committing substantial money and time to lengthy court cases, parties can explore arbitration, mediation, and conciliation. These processes allow parties to engage independent professionals – who may or may not be lawyers – or industry experts from their own trade sector to facilitate resolution.
Commercial property disputes often involve arbitration clauses within signed leases. As a result, landlords and tenants are required to submit disagreements to arbitration before pursuing court action. Similarly, many commercial contracts include obligatory referral to trade body experts or arbitration procedures as a prerequisite to litigation. A solicitor can advise on whether such provisions apply to your situation and conduct the arbitration process on your behalf.
Arbiters offer distinct advantages in commercial disputes. They can cut through peripheral issues to address the heart of the disagreement, and because both parties have agreed to their involvement, they command trust from all sides. Crucially, arbiters reach judgments based on facts and contractual obligations rather than being swayed by the parties’ pride, greed, or anger – emotions that often cloud direct negotiations.
The court option and its consequences
When arbitration proves unsuccessful or unavailable, court proceedings remain the final option. However, litigation is far from straightforward. One cannot simply appear in court for a debate. Your solicitor must prepare comprehensively, gathering evidence, drafting legal documents, and building your case methodically. Even with your solicitor firmly on your side, they may identify flaws in your position or evidential difficulties that make court action riskier than anticipated.
If legal analysis supports proceeding, preparations commence for court action. Every party must understand that litigation demands significant time, money, and emotional resilience. The process generates stress that extends beyond the courtroom, affecting business operations and personal well-being. Throughout proceedings, parties retain the option to review their position and seek settlement on reasonable terms, and many do precisely that as costs mount and uncertainties multiply.
Ultimately, court action produces a winner and a loser. The unsuccessful party faces not only disappointment but also a substantial legal bill covering both their own costs and often those of their opponent. Perhaps more significantly, commercial relationships will have been irrevocably damaged, if not completely destroyed. Even when business continues, the trust and goodwill that once existed rarely recover fully.
Understanding these consequences underscores why solicitors consistently emphasise early intervention, clear communication, and alternative dispute resolution whenever possible.
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John Roberts is a Partner and Director at Austin Lafferty Solicitors. John has been with the firm for almost 20 years, with experience in all areas of business law.
