However, more complex business disputes may be more difficult to resolve, whether involving significant sums of money, intricate legal questions, or sensitive relationships that require careful handling.

In these situations, seeking professional legal support can make all the difference. Expert dispute resolution advice helps ensure that your rights and interests are protected, that you understand the options available to you, and that the matter is resolved as efficiently and constructively as possible.

This guide explains what business disputes are, the types of dispute resolution methods needed to reach preferable settlement agreements, and how to resolve business disputes with a reputable solicitor.

What are the common causes of business disputes?

Business disputes are disagreements that arise between one or more company owners and a related stakeholder, such as a director, employee, client, supplier or fellow shareholder. These disputes can occur in any type of organisation, regardless of its size or sector.

At their core, business disputes usually involve a clash of interests, differing interpretations of agreements, or concerns about how a company is managed or how obligations have been fulfilled. They can relate to matters such as contracts, payments, performance, ownership rights, or the conduct of individuals within the business.

While many disagreements can be resolved informally through discussion, some disputes require more structured approaches to protect the business’s interests and maintain important relationships.

Business disputes can arise in many different situations and often have a significant impact on the operation and reputation of a company if not resolved promptly. Some of the most common types of business disputes include:

• Contract disputes: disagreements about the terms, interpretation or performance of a contract are among the most frequent causes of business conflict. These disputes can involve issues such as breaches of contract, late deliveries, defective goods, or failures to provide services as agreed.
• Employee disputes: issues between employers and employees can relate to matters such as unfair dismissal, discrimination, grievances, or breaches of employment contracts. Prompt resolution helps protect the business and maintain staff morale.
• Shareholder disputes: disputes between shareholders can arise over the management of the company, dividend policies, or the direction of the business. Such conflicts often require careful handling to protect the interests of the business and avoid damaging relationships.
• Director loan account disputes: conflicts over director loan accounts occur when there is disagreement about money borrowed from or lent to the company by directors. These disputes can have tax implications and impact the company’s financial stability.
• Misrepresentation claims: a business may face allegations of misrepresentation if false statements induced another party to enter into a contract or agreement. These claims can lead to rescission of the contract and claims for compensation.
• Derivative claims: a derivative claim is brought by a shareholder on behalf of the company, typically against a director for breach of duty or wrongdoing. These cases are often complex and sensitive, requiring specialist legal advice.
• Debt recovery disputes: when customers or clients fail to pay invoices, businesses often need to take action to recover the debt. Debt recovery disputes can range from simple non-payment to defended claims involving counter-allegations.
• Intellectual property theft: disputes involving intellectual property arise when a business’ ideas, branding, designs, or proprietary information are used without permission. Intellectual property theft can cover issues such as copyright infringement, misuse of trade secrets, or unauthorised use of trademarks.
• Boardroom disputes: conflicts between directors or senior management over strategy or business arrangements, decision-making or personal conduct can be highly disruptive.
• Commercial property disputes: issues can arise over commercial leases, rent arrears, repairs, dilapidations or termination of agreements. These disputes can affect the use and value of business premises and often require specialist advice to resolve effectively.

Alternative dispute resolution (ADR)

When a business dispute arises, it is often beneficial to explore constructive ways of resolving the issue without the time, cost and stress of court proceedings. These approaches, known collectively as alternative dispute resolution (ADR), include the following methods:

• Mediation: a flexible and confidential process where a neutral third party assists the parties in exploring options to settle the dispute. The mediator does not impose a decision but facilitates constructive discussions, helping everyone involved to clarify issues, identify shared interests and develop a mutually acceptable agreement. Mediation is particularly useful where parties wish to maintain an ongoing business relationship or avoid the publicity of court proceedings.
• Negotiation: this process involves voluntary participation and direct communication between the parties involved. Each side has the opportunity to set out their position, discuss their concerns openly, and work towards a practical solution. Negotiation can be informal or supported by legal advisers, and it often helps preserve commercial relationships by encouraging dialogue and compromise.
• Conciliation: similar to mediation but can be more advisory in nature. A conciliator will actively assist the parties in understanding each other’s perspectives and may suggest potential solutions. This approach combines elements of mediation with expert guidance, often helping to overcome deadlock where communication has broken down. Conciliation can be especially effective in employment and contractual disputes where an impartial viewpoint is valuable.
• Arbitration: a formal process in which an independent arbitrator, agreed by the parties or appointed by an external body, considers the evidence and arguments before making a legally binding decision. Arbitration can offer a quicker and more cost-effective alternative to litigation, with the added benefit of privacy and flexibility. The outcome, known as an award, is legally enforceable, providing certainty and closure to the dispute.

Each of these dispute resolution methods has unique advantages. The most appropriate approach will depend on factors such as the complexity of the issues, the need for confidentiality, the value of the claim, and whether preserving a business relationship is a priority.

Litigation

When alternative dispute resolution methods such as negotiation, mediation, or arbitration have been unsuccessful, litigation is often the next step. Litigation involves commencing formal court proceedings so that an independent judge can consider the relevant evidence and make a legally binding decision.

The litigation process begins with the preparation and filing of a claim through the court system, followed by the exchange of detailed information and evidence between the parties, known as disclosure. Both sides have the opportunity to set out their case clearly, supported by witness statements and expert reports where necessary. Throughout this process, the court will set directions and timetables to ensure the case progresses efficiently.

Although litigation can be more time-consuming and costly than other methods of dispute resolution, it offers the certainty of a clear, enforceable judgment. For some disputes - especially those involving serious breaches of contract, complex legal arguments, or where one party is unwilling to engage constructively - litigation provides a necessary means of protecting your rights and securing an appropriate remedy.

At Walker Foster, we understand that litigation can feel daunting. Our experienced team will guide you through each stage of the process with clear, practical advice and dedicated support. We will always explore opportunities to settle the matter wherever possible, while ensuring your interests are robustly protected should court proceedings be required.