Entering into contracts is crucial for your small business. You need contracts whether you hire contractors or employees, or partner with another business. Unfortunately, contracts do not always work out.
If you and the other party start disputing about something, you may wonder how to resolve the situation. Before you do anything else, you should review the contract with the help of an attorney. The answer to resolving the dispute may be in the contract itself. The document may contain a dispute resolution clause or termination clause and explain your obligations. If you cannot come to a solution after reading the contract and attempting to negotiate with the other party, here are three of your options:
1. Litigation
It may be necessary to move forward with a court proceeding to defend or enforce your legal rights. When you enter into litigation, you are starting a highly-structured process that the court dictates. If you succeed with litigation, the judge may order the other party to pay you in the form of a settlement.
2. Arbitration
Arbitration is the middle-ground option. It is known as an alternative dispute resolution method that is necessary if you can neither negotiate nor mediate but do not want to enter the court process. However, arbitration requires consent from both parties.
3. Mediation
If you and the other party are able to communicate and compromise, you may be able to mediate your dispute. During mediation, there is a neutral third-party individual who helps both parties come to a mutually satisfying agreement. This is a good option if you want to have as much control as possible over the process. However, mediation is not always possible if the other party is not willing to negotiate in good faith.
If you are unable to reach an agreement with the other party through one-on-one negotiations, you may need to seek legal counsel before you move forward.