Maybe you are about to add a fresh college graduate to your accounting team. Perhaps you sign contracts with clients because you offer a countertop refinishing service. You might even be in the middle of negotiations with a supplier who could help you cut your costs significantly.
Your contracts help you safely do business with another party. You get to clarify what you expect from them and explicitly state what you intend to do for them. You can also protect yourself from conflicts that might arise in the future.
Adding a conflict resolution clause to your business contract could help you avoid expensive future issues. Contract disputes can potentially lead to court and can damage your working relationship with the other party if you don’t handle them properly.
The right approach is crucial to preventing legal conflict with a contract
If you hope to minimize lawsuits from clients or major disputes with former employees, addressing conflict resolution in your contract can be a smart move. The approach you employ can make a big difference.
Many customers and professionals have heard negative things about mandatory, binding arbitration clauses. You may lose out on talent or customers if you require arbitration in the event of a conflict and insist that both parties abide by the decision no matter what.
A better approach might be to require alternative conflict resolution efforts before litigating. You can require non-binding arbitration or even mediation as a mandatory step before either party takes the matter to the civil courts. You might also require something less formal, such as a sit-down meeting between representatives of both parties if either party alleges a breach of the contract.
You can limit your liability in a contract as well
It may be possible to include terms in your contract that prevents someone from taking you to court for an undisclosed amount of damages. You could agree to specific penalties, like a late fee, in the contract in the event of certain likely or common breaches.
When you address future conflicts while negotiating with the other party, your contract can give both of you motivation to quickly resolve disputes when they arise instead of letting the issue fester. Evaluating your contracts and making updates and changes may increase the protection that they offer your company.