Instead of delaying in dealing with a problem or potential problem, a quick response can help avoid a problem turning into a dispute and saving you considerable costs in the long run.
A breakdown of communication between parties is the fastest way to escalate a problem into legal action. A party who fails to return calls or emails is only asking for problems to escalate as most people will interpret this as a sign of contempt against their position. Some other points to keep in mind are:
- keep communication courteous and productive;
- be honest about any limitation that affects your ability to resolve the problem;
- always call/email at the agreed time, even if you don’t have any update.
If you find it difficult to communicate with the other party in a constructive way, this is where an intermediary such as mediator or a lawyer can assist.
Entrenchment of a party usually occurs where one or both sides commit resources in defending their position in a dispute. The longer the dispute goes on, the more money and resources expended, the more entrenched each party becomes. This is why it is important to quickly respond and avoid costs escalating and becoming another part of any dispute resolution.
Investigate the claims being made by the other party rather than denying them outright in the first instance. If need be, simply let the other party know that you need time to look into the matter further. If you are unsure or require clarity, ask the other party to set out their claims in writing. One factor to assist with your investigation is to not let your personal views influence the outcome of the investigation process. Looking at a problem from the other party’s position with an open mind can assist with identifying any misunderstanding on both sides.
After investigating the claims of the other party, attempt to determine the merit of those claims. If a claim is arguable, this is where you need to make some commercial decisions before things escalate. While it can be difficult to know the ultimate outcome of legal proceedings, a reasonable idea of “best case” or “worst case” scenario can be determined. An offer to settle can be on various terms such as a “walk-away”, settlement of all claims, or part settlement. A partial settlement can assist in reducing the number of issues in contention and avoid additional costs. Usually all settlement offers (including discussions leading to an offer) should be made on a “without prejudice” to avoid compromising any rights you may have against the other party.
Agreement to settle
Settlement of a dispute can be as simple as paying an amount claimed by the other party. In other instances, it may be appropriate to formalise a settlement by a deed or agreement. The cost of formalising a settlement is to ensure:
- settlement terms are clearly specified to avoid future disagreement;
- allowance for what happens in the event of a default;
- remove the ability of a party to pursue “future claims” relating to the matter.
Tips in settling a dispute
The key point here is to be flexible in your position. Disputes are rarely settled by each party getting exactly what they want and even a court judgement can leave the successful party short of being awarded all their claims. Do not automatically presume that the eagerness of a party to settle is reflective of an inferior position with their claim. An eagerness to settle could simply be an indication that a party has come to an early realisation that dealing with the matter in this way is in their commercial interests.
It takes two to tango
A bit of a cliché, but true nether the less. If the other party refuses to discuss or compromise their position, it is extremely difficult to avoid litigation in such circumstances. It can be a common occurrence where one party is not ready to settle a dispute at the same time of the other party and in these instances a different approach may be required.
Why parties are reluctant to talk openly
The main two reasons are fear of disclosing liability where it was previously arguable or compromising any counter-claim a party may have. While these are valid considerations, they should not block parties from settling their disputes. “Without prejudice” discussions allow parties to talk openly about the matter without worrying that any statement or admission is used against the party at a later date. These concerns can be properly managed by discussing the matter with your lawyer.
Vantage Law provides the above commentary for the purpose of general information only and should not be relied upon as legal advice. You should contact us in relation to any legal advice you may need which is particular to your situation and circumstances.