The Problem: Even a prepared client, who was once best friends with a business partner, might nonetheless one day wind up sitting across the table from a former business partner now seeking to protect what was negotiated – contractual expectations.
Often these expectations are resolved by looking to assumption of a particular risk. Recently, the COVID-19 pandemic has raised or renewed many related issues. Example: Does the contract state that a lessee be able to open its doors – and that this is a contractual condition necessary before any lease payments are due?
Good representation means that the attorney has asked – What does this business need? – and furthermore has articulated these essential Conditions Precedent into any agreement for you. Ask an experienced attorney to clearly articulate these business needs in the contract. This way, both sides can better understand and continue a clear, positive business relationship – free from lengthy legal battles.
Here’s the good news: Let’s say that one party insists on “meeting matters out in court.” At this later stage in the business relationship, your attorney should be able to help you to survey and select from the many conflict-resolution methods available for your situation. These are often customizable with the mutual consent of the parties – even some court rules. With that in mind, here is a high-level overview of the options you are most likely to see:
The Courts: Here, you might find the clearest rules for procedural fairness (or “due process”) and the most robust historical record (or “legal precedent”) across the many federal, state, municipal, and other specialized courts. Weighing against these advantages, you might find that this venue will cost more in time, resources, and distraction from your business due to the many procedural steps including discovery/depositions and securing a date on the court’s busy calendar. Note that there are exceptions, like so-called Rocket Docket Courts and many states’ small claims court (with limited rules and options, but for claims of a certain smaller size).
Mini Court: Borne largely out of the costly court processes and also the risk of a high outcome possible from a jury, Mini Courts allow for parties to experience the risk of leaving the fate of their case in the hands of a jury. After this experience, the parties might be more inclined to settle, which hopefully is more amicable and ultimately is less burdensome on a court’s finite resources.
ADR: Arbitration, Conciliation, and Mediation are the primary methods found within Alternative Dispute Resolution (ADR). You might have heard of a multi-door courtroom, where the judge presents these alternative methods. Typically, this is seen where matters of emotion, intrinsic value, or justice might significantly outweigh any clear-cut factual arguments of law.
- Mediators are less costly, may offer more time to hear the parties, and help the parties hear each other – without the fear of a binding decision.
- Conciliation is commonly considered the court-ordered version of mediation and, if a mutually agreeable outcome were to be reached by the parties, then the judge would get one final opportunity to review and decide whether to certify the award.
- Arbitrators are increasingly common for commercial contracts, particularly multi-national contracts to ensure that no one party gain a home-court advantage by resorting to its own national court system; and as of August 2020, the courts of 166 countries will defer to an arbitrator’s decision if such method is provided in the original contract.
Conclusion: Whether drafting the original contract or deciding how to resolve a subsequent conflict, the experience is critical to protecting assets, preserving relationships, and avoiding unnecessary business distractions.
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