Problems arise every day between small businesses, their customers, suppliers and employees. Most of them are dealt with quickly and efficiently through common sense, but sometimes they turn into a dispute which needs further understanding to resolve it.
In general, there are five steps to dispute resolution:
Step 1. Understand the dispute
Step 2. Talk to the other party
Step 3. Write to the other party
Step 4. As for help from a third party
Step 5. Go to court
Step 1 - Understand my dispute
If you think something is unfair or not right, it is important to understand the problem and how it affects your relationship with the other party. This will help you to make informed decisions about the best way to resolve the dispute.
How did the dispute arise?
A good place to start is to ask yourself, how did the dispute arise? It can be helpful to write a list of the events leading up to the dispute and to highlight the key points.
Check your facts
- If you have a written contract, you should read it carefully. Contracts include the rights and responsibilities of each party and obligations you must meet. There may also be a dispute resolution clause in the contract that needs to be followed.
- If you have an oral agreement or part oral/part written agreement, while risky, these are just as valid as a written contract if there is proof of what was agreed. You may have supporting paperwork that forms part of the contract. For example, emails that confirm what was agreed, a list of specifications, a quote with relevant details about materials, timeframes, any notes about your discussions, etc.
Identify the issues
Write down the most important issues you need to resolve and put them in order of priority. It is also important to think about what the other party might identify as their key issues.
Are there misunderstandings?
Many disputes arise because of misunderstandings. Consider that there might be some facts, background or current circumstances you don’t know about that may have led to the issues. A conversation with the other party may clarify the issues and lead to a resolution.
What are your priorities?
Work out what is most important to you – Is it getting paid? Getting more work in the future? Or, finishing the job and moving on? Is there a primary issue that, if resolved, will also resolve a number of other concerns?
Identify potential outcomes
Consider what you know about the dispute and identify potential outcomes. Think about what you want to achieve and what you can realistically expect to achieve. Consider how this will impact on cash flow, time and resources, productivity, future business, and personal relationships.
Talk to someone outside the dispute, such as a trusted adviser. Do they agree with your position?
Take time to consider what the other party may think of the situation, what their issues may be, what they may want to achieve, and if they will think your outcome is reasonable.
Check your emotions – are you angry or disappointed? Could this be clouding your perspective?
Download the checklist:
Step 2 - Talk to the other party
Now that you understand your dispute it is time to talk about it with the other party. If the issue is minor, a telephone conversation may be all that is needed, but for more complex disputes, a face-to-face meeting can be more successful.
It is important to prepare for your meeting by considering how your dispute starts, the key issues and the perspective of the other party.
In your meeting stay calm, be professional and be prepared to negotiate and compromise. Make clear written notes about your discussions and any outcomes which were agreed.
Be aware that problems are often caused by misunderstanding. Knowing what events led to the issues arising and discussing this with the other party may help to identify if there was a misunderstanding.
Keep a record
Make clear, written notes outlining discussions and outcomes, and if possible, prepare an agreed record of the discussion at the end of the meeting. These notes may form part of your evidence if the dispute is not resolved and needs to be escalated.
Step 3 - Put it in writing
If talking over the issue didn’t work, writing a polite and professional letter is the next step. Putting your concerns in writing provides the other party with a chance to fix the situation before further action is taken. It can also be used as evidence if the situation needs to be escalated.
If your dispute is complex or writing isn’t your strong point, ask for help.
Tips for writing a letter of concern:
- Who – Address your letter to the person who is responsible for supervising the person or area you are having trouble with, or write to the head of the business or organisation.
- Branding – If you have a business letterhead, business logo or brand, add this at the top of your letter, it will make it look more professional.
- Content – Set out your concerns as clearly and briefly as possible. Provide relevant background information, identify options to resolve the dispute and provide your contact details. Make it clear that you want to resolve the situation professionally and quickly. Avoid laying blame for the situation.
- Language – Be polite and professional. Avoid using abusive, aggressive or overly emotional language.
- Attachments – Attach copies of relevant paperwork to your letter. For example, a copy of your contract, an email, a list of specifications, a quote, an invoice, etc.
- Copy – make a copy of your letter and keep it.
Need more help? Download an example letter.
If you have tried unsuccessfully to get an invoice paid, a letter of demand might be your next option. A letter of demand is usually sent if you still have not received your payment after first and second reminder letters.
Step 4 - Ask for help from a third party
Alternative dispute resolution (ADR) is an alternative to going to court to resolve your dispute. ADR is generally quicker and cheaper than court and gives you more control over the outcome. Common types of ADR include facilitation, mediation and conciliation.
The language used in dispute resolution can be confusing. The National Alternative Dispute Resolution Advisory Council has a glossary
that explains common terms used in dispute resolution in Australia.
There are many dispute resolution services available to help resolve business disputes. Dispute Support
is an online dispute resolution information and referral tool. It will help you to find the most appropriate low cost service to resolve your business dispute.
Step 5 - Go to court
Taking the matter to court should be the last resort. Court is expensive, time consuming and the outcome is out of your control.