How Can Keeping Records Help Prevent a Commercial Dispute?

Commercial disputes can be extremely difficult for a business. For suppliers of services, disputes can be expensive, time-consuming and stressful. They can also damage commercial relationships and even bring business operations to a standstill. However, there are certain tactical steps you can take to prevent disputes from happening in the first place, in particular by keeping clear records. This article will explore how record-keeping plays an active role in dispute prevention.

Why Are Records and Documentation Important?

It can be very easy to lose track of commitments in business, particularly when things get busy and your time as a business owner is limited. However, having a clear audit trail and records will benefit you hugely in the long term.

Record keeping is good practice and is crucial for future-proofing your business and is instrumental regarding dispute prevention. Poor record keeping is very risky and can lead to various problems, including customer complaints.

Record keeping is a vital task and important for various reasons, such as:

• ensuring sure you have a record of what you have agreed with commercial counterparties and what your contractual obligations are; 
• ensuring you can deliver upon your contractual commitments; and 
• having clear evidence to turn to in the event of problems during a contractual relationship.

Investing in good record-keeping can save a business time and money and help develop good business practices.

Here are some of the key ways in which sound record-keeping could lead to dispute prevention.

1) Records Can Help You Keep Track of Your Contractual Obligations 

Commercial contracts are vital for businesses. You should have a robust written contract that sets out a comprehensive set of terms documenting what you have agreed with your customers. However, it is easy to forget what your contract says, and it can be difficult to keep track of contractual commitments you have given to multiple customers. If you lose track of your commitments and fail to comply with them, you could breach your contract and face legal claims from customers. 

As a supplier of services, you should, therefore, keep clear records and communicate with your customers throughout your contractual relationship. For example, it is vital to keep a record of what you promised to deliver to your customers under a contract. In practice, a contract summary sheet can help. This is a short outline of the key information about your contractual obligations to your customer.

Examples of Important Information to Keep Records Of  

You should keep records of important information. This includes the following.

1. All the actions you are required to fulfil under your customer contracts. For example, if you have agreed on specific dates for delivery of products, ensure you document and diarise those dates. Failing to deliver to agreed contractual commitments may mean you fall in breach of your obligations under the contract.
2. If a customer has made a bespoke request that is outside of your usual business service, ensure you have documented what you have agreed to provide. For example, if a customer requires products to be manufactured to a particular specification, document and keep a record of the specification the customer has requested. By doing so, you can continue to refer to that information and ensure that your product delivery complies with the customer’s requirements.
3. If you require specific permission from the customer before carrying out a particular act, ensure you document this and keep reminders of it. For example, your contract may require you to seek your customer’s approval before incurring expenses for their project. In this case, keeping records will remind you to reach out to the customer for prior approval before incurring expenses.

2) Records Can Help You Resolve Customer Complaints

Despite your best efforts to keep them happy, customer complaints will inevitably arise at some stage.

Having clear records can help you resolve problems with your customers when they arise. You should follow these tips concerning keeping records of your interactions with customers to reduce the propensity for customer complaints. 

1. Document all your communications and key actions taken under a customer contract. For example, if you have delivered a very large or important order to a customer’s premises, ensure that you have evidence of the delivery. That way, if the customer contests the order, you have clear evidence to point to showing them that you have complied with your contractual commitments. 
2. If you have agreed on something with the customer over the phone, make sure you make a record of that conversation so you remember your commitments. If the customer later raises a problem with your service, you can refer to your telephone conversation record and explain that you have delivered what was agreed on the telephone call. Having a record may help quickly resolve the issue.
3. If an outside unexpected ‘force majeure’ event happens that delays your ability to perform your contractual obligations, keep clear records of what happened and why it delayed your performance. By doing so, you can explain the incident to the customer and avoid complaints as to why the services were delayed.

A lot of customers may also insist on updates and progress meetings to check how the performance of the contract is progressing. Having clear records can help demonstrate you have complied with the contract terms and help keep customers happy, thereby avoiding complaints.

3) Records Can Help You When the Customer Is at Fault

As a supplier, sometimes you will face your own problems with customers. In this case, record-keeping can help. For example, records can help you monitor if the customer has complied with their own contractual commitments.

You should keep records and reminders of key dates and obligations, including:

• when the customer is required to give you information that you need to deliver your products or services. If the customer needs to provide you with information by a specific date, make a note of it and ensure you follow up with the customer to ensure that you have everything you need from them. If the customer fails to provide the information, they may fall in breach of the contract and you could have various remedies; and 

• if your customer misses a payment, make sure you document all of your attempts at chasing the payment. This could serve as vital evidence later down the line if the non-payment problem escalates and a dispute arises. 

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Key Takeaways

Record keeping is critical for contract management and greatly helps in the area of dispute prevention. As a business supplying services, good record-keeping can help ensure you comply with your contractual obligations. Further, if you maintain accurate and detailed records, these can serve as useful evidence in the event of any customer complaints.

If you need legal advice concerning how to prevent a dispute, contact our experienced disputes lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.