Business DisputesWhen Should You Speak to a Lawyer?

Why it matters

Disputes are an unfortunate reality for many businesses. They can arise with customers, suppliers, contractors, business partners, shareholders or landlords - and even a relatively small disagreement can become costly if it isn't handled appropriately.

Getting legal advice early can help you understand your position, protect your business and explore ways to resolve the dispute before it becomes more difficult, expensive or time-consuming.

What are the most common business disputes?

Business disputes can arise in many different situations, including:

• •Breach of contract
• •Unpaid invoices or payment disputes
• •Partnership disputes
• •Shareholder disagreements
• •Supplier or contractor disputes
• •Customer disputes
• •Commercial lease issues
• •Disagreements over services or performance
• •Intellectual property disputes
• •Misrepresentation or misleading conduct
• •Restraint of trade issues

The appropriate response will depend on the nature of the dispute, the agreements between the parties and what outcome your business is trying to achieve.

What should you do when a business dispute first arises?

Before taking action, it is important to understand both the facts and your legal position.

Questions worth considering can include:

• •What was originally agreed?
• •Is there a written contract?
• •Has either party breached the agreement?
• •What evidence or correspondence is available?
• •What does the contract say about resolving disputes?
• •Are there deadlines or notice requirements?
• •What outcome does your business actually want?
• •Is preserving the commercial relationship important?

A lawyer can review the circumstances and relevant agreements, explain your legal position and help determine the most appropriate next step.

Sometimes a carefully drafted letter or early negotiation can prevent a disagreement from developing into a much larger dispute.

What if the other party has breached a contract?

A breach of contract can take many forms. A customer may fail to pay, a supplier may not deliver what was agreed, a contractor may fail to perform work properly or another party may attempt to end an agreement unexpectedly.

The first step is usually to establish what the contract actually requires and whether a breach has occurred.

A lawyer can help interpret the agreement, assess the seriousness of the breach and explain what remedies or options may be available.

Depending on the circumstances, this could involve requesting performance, seeking payment, negotiating a solution, issuing a formal notice, terminating the agreement or pursuing compensation.

What can you do about unpaid invoices?

Unpaid invoices can have a significant impact on cash flow, particularly for small businesses.

Before escalating the matter, it can be important to establish whether the debt is genuinely undisputed or whether the customer is challenging the amount, work performed or terms of the agreement.

Depending on the circumstances, the next steps could include:

• •A formal demand for payment
• •Negotiating a payment arrangement
• •Reviewing contractual rights
• •Using an appropriate debt recovery process
• •Commencing legal proceedings where necessary

A lawyer can help determine which approach is proportionate to the amount involved and whether pursuing the debt commercially makes sense.

How are partnership or shareholder disputes resolved?

Disagreements between business owners can be particularly difficult because they can affect both the ownership and day-to-day operation of the business.

Disputes may arise over:

• •Business strategy
• •Financial decisions
• •Distribution of profits
• •Director or shareholder conduct
• •Access to business information
• •Roles and responsibilities
• •A shareholder or partner wanting to leave
• •Selling or transferring an ownership interest
• •Allegations of misconduct
• •Deadlock between owners

The starting point may be the company's constitution, shareholders' agreement, partnership agreement or other arrangements between the owners.

A corporate or commercial lawyer can help establish the parties' rights and explore potential solutions, which might include negotiation, changes to the business arrangements, a buy-out or, where necessary, formal legal action.

What about disputes with suppliers, contractors or customers?

Commercial relationships don't always work as expected.

Disputes can arise over pricing, payment, delays, quality of work, delivery, performance standards or what the parties originally agreed.

A lawyer can review the relevant contract and communications, help establish each party's obligations and advise on practical options for resolving the disagreement.

Where an ongoing commercial relationship is valuable, resolving the issue without destroying that relationship may also be an important consideration.

How are commercial lease disputes handled?

Disputes between commercial landlords and tenants can involve issues such as:

• •Rent or rent reviews
• •Repairs and maintenance
• •Operating expenses
• •Assignment or subleasing
• •Renewal rights
• •Damage to premises
• •Use of the property
• •Breach of lease
• •Ending the lease

The lease itself will often be central to determining the parties' rights and obligations.

A lawyer with commercial property experience can review the lease, explain your position and help negotiate or pursue an appropriate resolution.

Does a business dispute have to go to court?

No. Many business disputes are resolved without going to court.

Depending on the circumstances, options may include:

• •Direct negotiation
• •Lawyer-assisted negotiation
• •Mediation
• •Arbitration
• •Another dispute-resolution process provided by the contract
• •Formal legal proceedings

The appropriate approach will depend on factors such as the amount involved, the strength of the legal position, the relationship between the parties, the urgency of the matter and the cost of pursuing it.

A lawyer can help assess these factors and determine which approach makes commercial as well as legal sense.

Can a lawyer help negotiate a business dispute?

Yes. In many cases, the objective isn't simply to establish who is legally right - it's to find an outcome that works for the business.

A lawyer can help clarify your legal position, communicate with the other party, negotiate proposed solutions and document any settlement that is reached.

Getting advice doesn't automatically mean starting court proceedings. Early legal involvement can sometimes make it easier to resolve a dispute before positions become entrenched.

When should you speak to a lawyer about a business dispute?

There isn't one point at which every business dispute requires legal advice.

However, it may be particularly useful when:

• •Significant money is involved
• •The dispute could affect an important business relationship
• •You don't understand your rights under a contract
• •The other party has threatened legal action
• •You've received a formal legal notice or demand
• •You are considering terminating an agreement
• •A shareholder or partnership dispute is affecting the business
• •Negotiations have reached a deadlock
• •There are important deadlines
• •The dispute could expose the business to significant liability
• •You are considering court proceedings

The earlier you understand your legal position, the more options may be available for resolving the dispute.

What type of lawyer do you need for a business dispute?

That depends on the nature of the disagreement.

For example:

• •Contract dispute → Commercial disputes lawyer
• •Shareholder or partnership dispute → Corporate/commercial disputes lawyer
• •Commercial lease dispute → Commercial property lawyer
• •Employment dispute → Employment lawyer
• •Intellectual property dispute → Commercial/IP lawyer
• •Court proceedings → Commercial litigation lawyer

You don't necessarily need to determine the exact legal speciality yourself. What's important is finding a lawyer with experience relevant to the particular dispute your business is facing.

How can Get A Lawyer help?

Business disputes can involve different areas of law, and the right lawyer will depend on both the nature of the dispute and the outcome you're trying to achieve.

Tell us briefly what has happened. Get A Lawyer can help identify the legal help your business needs and match your enquiry with trusted New Zealand law firms suited to your particular dispute and ready to help - free to use and with no obligation to proceed.