Disputes are an inevitable part of running a business. Partners, shareholders, directors, employees, clients, and suppliers can disagree on a wide range of subjects and for many different reasons. Dealing with such bumps in the road is very common and is something every business faces at some point in time.

However, if commercial disputes are not resolved speedily and satisfactorily, they have the potential to escalate quickly and can severely threaten a business’s operations and derail its future trajectory.

In this blog, our Commercial Disputes team considers some common causes of company disputes and looks at the main ways to avoid them.

What are Company Disputes?

Company disputes are disagreements that arise as a result of business activity.

There are two main types:

1. Corporate disputes are internal disagreements about how the business should be managed.
2. Commercial disputes result from your relationships with another party, such as suppliers and customers.

What are some examples of Corporate and Commercial Disputes?

Disagreements between parties can arise for many reasons and can vary in severity and complexity. Some of the most common forms of dispute include the following:

Internal Disputes. Disagreements between partners, directors and shareholders of a company are commonplace and usually arise because of personal differences or disagreements over decisions about a business’s direction. Internal disputes can be highly disruptive and severely threaten a business and its reputation.

Contract Disputes. Contracts are the glue that binds the operations of a business together. Most businesses need a range of contracts with a variety of parties, and they can take many different forms. Typical commercial contracts include employment contracts between employer and employee, contracts for different suppliers of goods and services, franchise agreements, agency and distributor contracts and banking and finance agreements.

However, contracts can easily cause a business to come unstuck. Issues can include parties disputing the terms of a contract, parties failing to stand by the terms of their original agreements, or contracts needing to be renegotiated and parties being unable to agree on certain terms.

Professional Negligence Claims. Professional negligence claims cover a broad range of disputes. They are made against any professional who has not fulfilled the obligations they were hired to provide by failing to perform to a reasonable standard and with reasonable care. Examples can include your company suffering from a data loss due to an IT provider’s errors or your business being faced with an unexpected tax bill because of inadequate financial advice.

How are Company Disputes Resolved?

A trip to court to resolve a business dispute is usually considered a last resort. Instead, it is far preferable to try to resolve any commercial disputes by using alternative dispute resolution (ADR). There are four main types of ADR in the UK, and all are generally considered cheaper and quicker than litigation, while also having the appeal of maintaining a company’s privacy.

The main types of ADR are:

• Negotiation. This is usually considered the first port of call for those looking to resolve a dispute and involves the parties attempting to negotiate a compromise or instructing dispute resolution specialists to negotiate on their behalf.
• Mediation. The role of a mediator is to act as a jointly instructed neutral party and help with the communication between the parties to achieve a resolution.
• Conciliation. This is a popular choice for employment disputes and is a compulsory process for employees seeking to bring a claim to the Employment Tribunal. A third-party conciliator is instructed to discuss the issues and offer their own opinion to help the parties reach an agreement.
• Arbitration. An arbitrator is a neutral third party and an expert in the field of disagreement who listens to both sides of an argument before coming to a final decision that is then legally binding.

What can you do to avoid Company Disputes?

Every commercial dispute is different, and each must be considered individually so that appropriate action can be taken.

However, there are some general points of good practice that every business owner can do that will help reduce the chances of disputes arising in the first place and protect a business should any disputes occur further down the line. These include:

1. Undertake due diligence before entering into new commercial relationships with suppliers and other parties.
2. Make sure all contracts are adequately drafted and include the correct terms. This applies to employment contracts with members of staff, commercial contracts with external suppliers and any other forms of contract that your business needs. Robust contracts that clearly state each party’s rights, responsibilities, and liabilities and that are legally enforceable, are the foundations on which every successful business stands. Contracts should be reviewed regularly and renegotiated if a situation is going to change.
3. Partnership agreements. If you are currently operating your business as a partnership or considering starting one, you should have a partnership agreement. A partnership agreement will set out the respective rights and responsibilities of the partners and will almost certainly help to settle business conflicts should they arise.
4. Be proactive. As soon as a problem arises, try to address it quickly and resolve it as soon as possible by the appropriate means. You should seek specialist legal advice immediately to ensure a situation doesn’t escalate and so that you know where you stand from the start.

For more information about commercial disputes, please click here to read our Top 10 Tips for Handling Business Disputes.

Company Commercial Dispute Resolution Lawyers

If you are a business owner involved in a dispute or are starting a new business and want to know more about what you can do to protect yourself from future disputes, please contact Eric Robinson Solicitors today.

At Eric Robinson Solicitors our specialist lawyers will explain all the options and help you explore the best one for your business. We will always give you the best practical and strategic advice to fit your needs.

To find out more about how we can help you, please call us on 02380 218000 to speak to one of the team.

This blog post is not intended to be taken as advice. Information could have changed since the article was published. If you are seeking legal advice, please get in touch with our team of solicitors to discuss your matter.

The Different Types Of Joint Ownership

When a sole individual owns a property, they are referred to as the sole proprietor (or the sole legal owner). If more than one person owns a property together, they are considered co-owners.

There are two types of property co-ownership: joint tenants and tenants in common. When considering the term “tenants” in this context, it should not be confused with a tenant under a lease; they are completely different concepts when referred to in legal terms.

Joint Tenants

If you and another hold the property by reason of a joint tenancy, this means that neither person will possess a divisible share in the equity. 

Instead, the right of survivorship is applicable and the property will automatically pass to the remaining co-owner upon the death of the other. 

Joint tenants will not have a share of the property which could be potentially passed or shared under a Will

Tenants in Common

Under a tenancy in common, each person will have their own divisible share in the property and there will be no right of survivorship and you can still pass on your share of the property in your Will.

Changing Ownership

The way in which you hold property is dependent on a property transfer. You can change co-ownership of a property, and this can be as a result of some form of dispute such as separation or divorce or with marriage. 

There are occasions where co-ownership is changed automatically, for example, if one co-owner becomes bankrupt

What to Consider Before Entering a Joint Property Ownership

The courts are regularly asked to resolve disputes between co-owners of a property regarding the rights that each co-owner has when the relationship breaks down, if one co-owner dies or if the property is sold. 

When you do buy a property with someone else, it is important to obtain legal advice on how you plan on holding the property. If you have a clear structure in place at the outset this will help avoid disputes in the future.

When you are purchasing a property as a co-owner, it is important to take into account the following considerations:

• Seek legal advice on which form of co-ownership is the most suitable for you and ensure that it is clearly recorded in the transaction documentation.

• With tenancies in common, it is always advisable to put in place a trust deed which sets out each co-owner’s rights, shares, entitlements and what would happen if one co-owner wishes to sell but another objects.

It is highly important to consider each co-owner’s contribution to the purchase price, any outgoings for the property and mortgage. 

If both the co-owners are on the mortgage, there will be joint and several liabilities in the event of default – this means that the mortgage company can pursue one co-owner for all of the mortgage arrears.

With a carefully considered trust deed you may improve your chances of recovering monies that you are required to pay to a mortgage company on behalf of a fellow co-owner.

How Do Joint Ownership Disputes Typically Arise? 

Disputes can often arise if a party purchases a property in their sole name and over time, another party contributes to the property by a way of mortgage payments, outgoings, or even part of the purchase price.

The legal title will remain in sole ownership, but one party may look into establishing beneficial ownership in the property and also attempt to prove that there was an agreed intention that both parties would be entitled to a share in the property. 

It is important to seek legal advice and putting in place co-ownership agreements will help to protect each party’s interest.

A joint tenancy may not be the appropriate decision if one of the co-owners has contributed a higher amount towards the purchase price than the other co-owner(s), especially where the party making the larger contribution wishes to retain scope to have their larger contribution properly recognised on any separation or future sale of the property. 

A joint tenancy could also be unsuitable if you have any family from a previous marriage and you would like to leave your share of the property to your children as opposed to your co-owner.

Eric Robinson Dispute Resolution Specialists

At Eric Robinson Solicitors we help you resolve your dispute as quickly and as inexpensively as possible. 

We will always give you the best practical and strategic advice designed around your needs. There is more than one way of resolving a dispute and it needn’t involve the courtroom.

Our expert lawyers will explain all of the options to you and help you explore the best one for your business.

We’re experienced negotiators and tacticians as well as having commercial awareness and the ability to work closely with our clients and their other professional advisers.

To find out more about how we can help you resolve any co-ownership disputes or avoid any potential disputes, call us on 02380 218000.