For Heraclitus, a presocratic philosopher born in Greece in the 6th century BC, “The constant conflict of opposites is defined as the father of all things”.
The prospect of a commercial dispute is the inevitable risk of business. This is usually given a negative connotation. In itself, however, a dispute is neither bad nor good. It can also indicate the need for evolution and can even be a source of opportunity, and lead to a new situation of balance, better for the parties.
If the conflict receives this generally negative connotation, it is because of the magnitude of the financial and emotional costs it too often involves, when the parties struggle to resolve it. These costs are generally more to be seen as a symptom of poor conflict management than as caused by the intrinsic qualities of the conflict. In the end, what is negative is a conflict that is poorly managed. Because it is under these conditions that it degenerates, leaves the reasonable control of the company and produces as much collateral damage as the stakes are high for the company.
Conflict prevention and management
Good conflict management begins with reasonable attention to trying to prevent it. To this end, it is recommended to adopt a commercial and contractual policy in line with the company’s ambitions and capacities.
Here is a checklist whose respect reduces the risk of a dispute escalating.
A company must act in a prudent and diligent manner, at all stages:
When concluding a contract:
- by seeking a balance of reciprocal obligations and assessing the probability that each party will perform its services properly, taking into account intrinsic and extrinsic factors.
- by identifying the areas for which particular protection is necessary and negotiating appropriate and effective guarantees, if necessary (at the same time, in some cases, it is not necessarily healthy to provide for everything as this could freeze the contract, increase the negotiation costs and prevent the parties from reaching a favourable outcome).
- by seeking appropriate insurance, both in terms of civil liability (extra-contractual and, where possible, contractual, by defending, and where possible by defending), as well as legal protection insurance.
In the performance of a contract: by special attention:
- to carry out the legal assessment of any change in circumstances, and the examination of the desirability of adapting its commercial strategy;
- to comply with the formalities of the contracts (for example, if the amendment of a contract requires the signature of an addendum by the legal representatives of the parties, this formality must be respected);
- to react in a timely and appropriate manner in the event of non-performance and a real risk of non-performance, with particular regard to the contractual mechanisms for settling disputes.
At any time:
- have a compliance and appropriate training policy within the company, documented for the staff;
- organise and maintain archives that can be consulted for several years, documenting the key phases of the formation and execution of the contract, because this will have, in the event of a dispute, a real practical interest in enabling the company to prove what it claims;
- bear in mind the elements mentioned below, characterizing the phase in which the dispute would prove insoluble (below).
Since the primary role of a lawyer is to reconcile the parties, questioning his or her counsel will allow the company to obtain an external opinion as well as to be reminded of the important legal elements underlying the commercial relationship in question. This insight will often allow decision-makers to spontaneously reach an amicable settlement of the dispute.
Resolving a dispute amicably requires a contract, specifying the extent to which the arrangement chosen by the parties modifies or even terminates the relationship between the party in respect of their dispute or in respect of all their obligations. Seeking the advice of a law firm is highly recommended for this purpose. The latter may, on this occasion, draw the company’s attention to elements that are necessary or useful to be taken into consideration in order to truly put an end to the dispute, such as the desirability of detailing the terms of the transaction.