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Addressing the risk of a dispute with a business client

Clients are the lifeblood of a business that offers services. Their patronage helps to provide revenue, and their recommendations to others can help an organization establish a strong presence within a local market. Although many companies, especially those just starting out or in highly-competitive industries, will do whatever they can to please their clients, there will inevitably be some disputes that arise. A protracted disagreement with a client could lead to unfulfilled contracts and damage to a business’s reputation.

Although such disputes may end up going to court, most business owners and executives prefer to keep such matters out of the courts if possible. These are some of the ways that the risk of a contract dispute or similar disagreement with a client can potentially be addressed proactively or resolved if concerns arise.

Add penalties and other terms to contracts

Perhaps the best way to address a conflict with a client is to proactively protect the organization with the right contractual terms. The type of service provided, the overall cost and many other factors will influence exactly what terms the contract must include.

Penalty clauses for late payments and other contract violations on the part of the client and be very valuable inclusions that will keep disagreements from snowballing into big operational headaches. Being very clear about what each party expects from the other in the contract is also a way to prevent minor disagreements from snowballing into a business-disrupting conflict.

Rather than being immediately pedantic about penalties, businesses can improve the optics of a situation by offering clients options to resolve the matter amicably in a manner that is mutually favorable. Sometimes, achieving such compromises will require outside help.

Suggest alternative dispute resolution

Arbitration was often the go-to alternative to court, but it has fallen out of popularity to some degree in recent years. Many people are more open to mediation, which employs an amicable and cooperative approach instead of the court-like adversarial approach required in arbitration. Discussing the matter in mediation could help a business resolve an ongoing disagreement with a client amicably.

If enforcing a contract or attempting mediation doesn’t resolve a dispute, then it may be necessary to go to civil court to resolve a disagreement. Seeking legal guidance to prepare for future conflicts and responding appropriately when it does arise can help limit the impact that client-related conflicts will have on the organization.


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