In the world of business, disputes can arise from various situations and relationships. These conflicts, often referred to as commercial disputes, frequently include disagreements about contracts between companies and may have serious financial ramifications.
This article explores the common types of commercial disputes and potential resolutions that may help parties reach a satisfactory outcome.
What is a commercial dispute?
A conflict or disagreement between two or more parties that results from their business or commercial relationship is referred to as a commercial dispute.
Such disagreements frequently revolve around the responsibilities, obligations, and rights outlined in contracts. Parties involved in commercial disputes may consist of individuals, companies, organisations, or governmental entities.
Examples of commercial disputes include tenants not paying rent, customers accepting goods but refusing to pay and more. Below is a case study from DC Law LLC that illustrates what a commercial dispute case may look like:
A client, company A, sent a Quotation to company B. The Quotation set out the services being offered, which is the provision of excavators each with an operator at a certain fixed price per day for a specified period for a specific construction project. The Quotation also included some terms and conditions, including a term that company B must inform company A in writing of how many excavators it needed no less than 3 days before. Company B signed the Quotation. Subsequently, company B kept being late in paying company A and finally stopped paying them. Among other things, company B argued that company A did not supply the excavators on the days required, causing a delay in the construction works and purported to claim hundreds of thousands of dollars from company A for the delay and to “offset” their payment to company A from this claim. The matter went to court and DC LAW LLC successfully defended company A against the claim and even obtained payment for company A. DC LAW LLC showed that the delay to the construction project was not caused by company A but by other issues that company B had with other sub-contractors. In addition, it was also shown that company B did not comply with the contract to inform company A in writing of how many excavators it needed at least 3 days before, resulting in company A not knowing how many excavators to allocate to the project beforehand.
As experienced commercial litigation lawyers, we were able to provide legal advice to company A so that it knew the strength of its case, help them to strategize, assist them to try to resolve the commercial dispute out of court, and when that failed, to represent them in court against company B and obtain a favourable outcome for them.
Common types of commercial disputes
Most commercial disputes are contractual in nature. This means that it typically involves one party failing to fulfil their contractual obligations.
Some examples include, but are not limited to:
- Payment disputes: These disputes arise when there is a disagreement over payment terms, invoices, or the quality of goods or services rendered. For example, a customer accepts goods but refuses to pay the agreed-upon price.
- Employment disputes: These disputes result from disagreements between employers and employees, such as allegations of wrongful termination or contract breaches.
- Real estate claims: Commercial real estate disputes may arise from matters such as violation of lease agreements, property damage, or disagreements about ownership of real estate.
- Partnership or shareholder disputes: Conflicts can happen when there are issues with how profits are distributed, who gets to make decisions, or when there is a violation of fiduciary obligation in circumstances involving shareholders or business partnerships.
When faced with a commercial dispute, parties have several options to resolve their conflicts. The following alternatives to litigations are frequently employed for dispute resolution:
Mediation involves a neutral third party, the mediator, who helps facilitate communication and negotiation between the parties. The mediator does not make a decision; instead, they help the parties come to an amicable agreement. Through mediation, the parties are able to maintain control of the outcome and collaborate to reach an amicable resolution that meets their needs. Mediation can be done informally, for example, by parties appointing someone to mediate between them. This is typically a lawyer. Mediation can also be done formally by going through certain mediation organisations like the Singapore Mediation Centre or Singapore International Mediation Centre where mediators can also be persons who may not be lawyers but have knowledge of the subject matter in dispute.
In a procedure known as arbitration, unlike in mediation, a neutral arbitrator or panel of arbitrators considers the arguments and evidence put forth by both sides before reaching a conclusion and issuing an arbitration award. The arbitrator’s ruling is final. Arbitration is an alternative to a court action and is conducted privately. Many companies prefer the privacy of arbitration to a public court hearing. Arbitration awards are also easier to enforce in foreign countries than court judgments.
Business operations can be disrupted by commercial disputes, which can also damage relationships between the parties. Understanding the common types of commercial disputes and exploring alternative dispute resolution methods, such as mediation and arbitration, can help parties navigate and resolve their conflicts in a more efficient and amicable manner.
Businesses may reduce financial losses and maintain important connections by exploring mutually agreed solutions, which will eventually encourage a healthier and more productive corporate environment.
If you are looking for a commercial dispute lawyer, do not hesitate to get in touch with us today. We are a reputable and professional law firm that specialises in commercial litigation, defamation law in Singapore and more. Our Managing Director, Doris Chia has more than 30 years of commercial litigation experience and she is also a Fellow at the Chartered Institute of Arbitrators and a Fellow at the Singapore Institute of Arbitrators.