In my last post, I highlighted the difficulty in predicting outcomes in certain types of claims
Businesses can, of course, help themselves by taking these simple steps:
- Keep better records of correspondence and communications, including retention of all written communications (including e-mail) and creating a written note of every important telephone discussion with a customer/supplier;
- Ensure that their Terms of Business (also often referred to as Terms and Conditions of Trading or “Ts & Cs”) are up to date and kept under regular review;
- Ensure that Ts & Cs are incorporated into every contract. This is absolutely critical. Ts & Cs must be sent to all customers before you enter into a contract, such as by using signature to Ts & Cs as a pre-condition to opening a trading account. If they are sent out only (or for the first time) with invoices, then they will not be incorporated and will have no contractual force. There is no point having perfect Ts & Cs if you then fail to use them properly;
- Obtain and retain proofs of delivery or certificates of completion (as appropriate) signed by a person with the relevant level of authority in the customer’s business;
- Operate an effective credit control policy and do not allow accounts to become so long overdue that the risk/exposure might threaten the viability of your own business. The only customers worth having are those who pay!
If businesses follow these steps, then the chances are that they will become involved in fewer disputes and those that they do pursue will have better prospects of success.
However, one issue that remains a factor in most disputes is that, once proceedings have been commenced, the parties will probably become entrenched in their positions out of a fear of showing weakness, and find it difficult to back down. The dispute can become personal (as between the key protaganists) and as a consequence the relationship between the parties will be damaged, often irretrievably.
But what if this was your biggest customer or the only supplier of key products/services within your market? Breakdown of that relationship could be devastating to your business.
Would it not be better to find a way to resolve matters quickly, without the inevitable clash of opinions and in a way that allows the parties to continue or even improve their trading relationship? It sounds like a utopian concept, but in my experience, it is one that we can often deliver, provided that both parties are prepared to compromise. This will be the subject of the third and final part of this blog.
Robert Whitehead is a Partner in the Commercial Dispute Resolution Team at Shulmans LLP