Top 5 legal disputes in small businesses

Small business disputes are often challenging to navigate, given the importance of preserving a good professional relationship with the other party. After all, a successful business is one with no obvious enemies.

Here are the top 5 most common legal disputes in small businesses, followed by some general advice on what your next steps should be. Do note that the information is generalised, and is not meant to be used for specific situations. 

 

  1. Landlord’s refusal to fix a problem

 

More likely than not, you are renting the premises used to operate your small business. Issues such as foul smells from drainage issues, leaks in the ceiling, and other property-related issues are common happenings for tenants. As a general rule, the tenant is not required to fix these issues unless it is a result of something the tenant has done.

The first step is to notify your landlord as soon as the problem is identified. Where the repairs are urgent, you can arrange for them to happen at the cost of your landlord – for example, if a pipe in the toilet bursts and you need a plumber to fix it immediately. Once the repairs are completed, serve your landlord with a notice of the repairs and cost within 14 days.

One of the common disputes faced by small businesses in this area is where a landlord refuses to reimburse the tenant for the cost of the repairs. 

 

  1. Failure to deliver goods by supplier

 

To make a business operate successfully, there needs to be a healthy flow of inventory. If your supplier isn’t meeting the delivery dates and has gone missing in action, you need to do all you can to contact them and request the delivery. 

Should there still be no response despite legitimate attempts to contact them, it’s time to send a letter of demand. This sets out the specifics of what is owed by the supplier, along with the costs involved and the supplier’s failure to deliver the goods with the option to provide a refund within a specified period.

In some instances, correspondence with a supplier may be active, however delivery of the goods may be stagnant. In such cases, it is probably better to mediate for a positive outcome than to burn bridges in court.

 

  1. Customer is not paying an invoice

 

It is fairly common for small businesses to experience bad debts where customers do not pay for work done. The first step is to send the customer a payment reminder. Should no response be received, you will need to send a letter of demand. This should state the circumstances of the debt, amount owed, and the failure to pay within a specified period will result in legal proceedings.

In some instances, correspondence with a customer may be active, however payment of the invoice is delayed. In such circumstances, you may prefer to mediate to maintain a positive relationship with the customer in hopes for future business continuation. 

 

  1. Business partnership issues

 

One of the most common business partnership issues faced by small businesses is when a partner decides to leave the business and set up their own one – while soliciting some clients. This act of leaving often results in the remaining partner to deal with the business debts accrued by both parties on their own. 

Where your business partnership is facing issues, revert back to your written partnership agreement which should state what will happen in the event of a partnership breakdown. If you don’t have a written partnership agreement, you may seek to bring an action for damages against your partner for taking lucrative clients away from your business – assuming that you are able to quantify the value of these contracts.

In such a case, mediation may be more suitable to maintain a good relationship with your business partner. The mediation process is aimed to help your business partner understand your position and to work together for an agreeable solution. 

 

  1. Sale of business dispute

 

There are cases where a purchaser demands his money back after the sale of a business occurred. This demand is often linked with the business not making as much money as claimed during the sale process. 

As long as the data on profits provided to the purchaser at the time of the sale was true, you have a solid defence. However, if the purchaser can show that you misrepresented the figures, they may have a successful claim against you.

 

Dealing with legal disputes as a small business

 

As a small business, your resources are limited. After all, every bit of profit is pumped back into further growth of your business.

The business element of a small business makes it susceptible to the same legal disputes large corporations face. From disputes with employees, vendors, customers, to conflict with neighbouring businesses, the list goes on. Given the limited resources of a small business, when a dispute happens, it can take a toll on the time and resources that your small business simply does not have.

This is where online mediation acts as a solution for small businesses to resolve disputes with minimal disruption. 

 

What is mediation?

 

Mediation is the process where parties in a dispute agree to work with a neutral mediator to resolve the issue by agreeing to an acceptable solution. It is a form of alternative dispute resolution which does not involve the courts.

The purpose of mediation is to facilitate a comfortable setting where parties work together to solve their issues. As such, mediation settings tend to be more informal and usually result in quicker outcomes. 

Mediation has been proven to be a beneficial form of dispute resolution for small businesses. From saving on time and costs typically associated with the legal process of litigation, small businesses are able to affordably resolve disputes, maintain a good reputation, and all in quick time. 

 

How online mediation can help small businesses

 

Here are three distinct ways online mediation can help small businesses better.

 

Cost

 

Mediation in itself is already a huge cost saver compared to litigation. However, realistically, it doesn’t mean that mediation is affordable.

A typical day’s worth of commercial mediation ranges between $2,200 to $5,500. And, it doesn’t necessarily mean that your dispute will be resolved within a day – as this entirely depends on how well all parties are willing to work together and compromise to meet a resolution.

For a small business owner, forking out half of a day’s worth of mediation isn’t just a drop in the bucket.

This is where online mediation stands out in shining armour. With straightforward pricing structures laid out beforehand, small businesses are able to work out the exact costs of entering online mediation and deduce its affordability. 

 

Time

 

Running a small business is time consuming. Beyond managing the day to day operations, there isn’t much time during the work day left to focus on other aspects outside of running the business.

This is where an online mediation platform like Immediation steps in.

With flexibility to manage and work around schedules, mediating through an online platform adds the advantage of control over time. You won’t have to travel to a mediation centre to mediate. You won’t have to arrange for transport or logistics. And, you won’t have to worry about a hectic schedule.

 

Faster outcomes

 

With online mediation, outcomes can be as quick as a 30 day turnaround time. This turnaround time is completely unheard of in the world of litigation.

Get in touch today and find out how Immediation can help your small business resolve a dispute with online mediation. 

 

 

Reference: https://www.nolo.com/legal-encyclopedia/mediation-small-businesses-29590.html

https://disputeover.com.au/mediation-cost/

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