When businesses wish to collaborate, they hope that the cooperation process will be smooth and free from unnecessary conflicts and disputes. So, what can businesses do to minimize these disputes when disagreements arise during the implementation of agreements? In this article, TNTP will point out some methods that can be applied to reduce disputes arising from contracts.
1. Disputes that may arise in contracts
In a contract, the following types of disputes can arise:
• Disputes regarding the Subject of the Contract: There are cases where the person signing the contract has no actual authority to represent a Party in the contract; Or the Contracting party does not have the capability to sign the contract, resulting in the contract being void.
• Disputes regarding the subject matter of the contract: Describing goods or services to be provided in the contract is crucial. However, in practice, there are still cases where the description of the contract’s subject matter does not match the reality, and the characteristics of goods or services are not specified. This can lead to disputes when the goods or services may not be suitable within the contract.
• Disputes related to contract content: If the content and terms of the contract are not specifically and thoroughly defined, disputes can arise when issues arise during implementation.
• Disputes during contract performance: During the performance of the contract, due to various reasons, parties may fail to perform or not perform as agreed, leading to potential disputes.
2. Minimizing disputes during the contract signing phase
Minimizing disputes can be achieved during the negotiation and contract signing phase. The following methods can be applied:
• Thoroughly research your partners: Conducting thorough research on potential partners can help businesses gather essential information about them and avoid entering into contracts with parties not having authority to enter into a contract or lacking the capacity to fulfill contract requirements or with companies that exist only on paper. Businesses should investigate tax identification numbers, business registration details, operational status, financial reports (if available), legal representatives, etc.
• Specify the detailed provision of contract terms: To prevent difficulties that may occur during contract performance, parties should draft the contract with the most detailed provisions possible regarding matters directly related to contract performance. This helps guide both parties in fulfilling their mutual agreements. Specific provisions may vary depending on the nature of the contract.
• Meticulous contract review: Thoroughly reviewing the contract draft is a necessary step to minimize errors in the contract preparation process and identify contract terms that may lead to a dispute. Terms related to the interests of the parties are often the ones with the highest dispute risks, as there may be cases where the contract imposes many obligations but grants very few rights, or vice versa. Therefore, reviewers should focus on such terms.
• Resolving any remaining issues: The fact that the parties have different desires and expectations can lead to differences in their viewpoints regarding rights and obligations in the contract. For such matters, direct negotiation with the partner based on a cooperative spirit is necessary, but there still need to be limits to protect one’s own rights and interests.
3. Minimizing risks during the contract implementation phase
• Properly perform the Agreed Terms: To avoid conflicts and disputes arising from contract execution, all parties must conscientiously adhere to the terms and conditions stipulated in the contract, ensuring they are performed precisely and completely as agreed upon.
• Utilizing Alternative Dispute Resolution Methods: In the event of issues arising during contract implementation, it is important to promptly notify the other party and actively cooperate to resolve the matter. Parties should use methods such as negotiation and mediation to address differences amicably.
Above is the article “Methods Businesses Can Apply to Minimize Disputes Arising from Contracts” that TNTP sends to readers. If you have any questions or need further clarification, please contact TNTP for timely assistance.