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How To Prevent A Business Dispute After Signing A Contract

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Getting a contract signed and a new deal across the line is great news for a business. However, the real work begins after signing. Business disputes can be challenging, time-consuming and costly for businesses. However, there are various practical steps you can take to avoid disputes from arising after a contract has been signed. This article will explore critical practical tips to help suppliers prevent a business dispute after signing a contract. 

Why Take Steps to Prevent Disputes? 

Customer disputes can occur for several reasons. For example, a customer may be unhappy because they believe a supplier:

  • has not delivered products or services on time; 
  • there are defects or problems with the products or services received by the customer; or
  • the supplier has misused their information or breached data protection laws

A business contract is one of the most important legal documents for your business. It should set out several critical legal terms designed to help protect you if things go wrong. Notably, a business contract should set out that your liability to the customer is limited if you breach your agreement. 

However, despite having a contract in place to protect you if things go wrong, it is vital to take steps to avoid disputes in the first place. Arguing with customers over contractual provisions being breached is likely to damage customer relationships. Instead, a business should work hard to develop good practices and avoid problems arising.

Preventing Disputes After Signing Contracts

1. Understand the Contract

It may be that the contract with your customer will run for an extended period and involve various stakeholders, such as directors and staff from your business and external third-party subcontractors or suppliers. 

Your business must have a strong and clear understanding of the contract you have signed. Failing to comply with any of its terms could leave you in breach of your contractual obligations and result in a dispute. 

Key action points to prevent a dispute include:

  • reading the contract to make sure you understand what is expected of your business and the customer;
  • ensuring that all relevant stakeholders involved, like employees and third parties, are informed and trained about their obligations under the contract; and 
  • if you are unclear about what certain terms in the contract mean in practice, seek legal advice so you fully understand the terms you have signed up to and avoid the risk of breaching them. 

2. Keep Records

It can be easy to lose track of your commitments, particularly when things get busy. However, having a clear audit trail and records will help you prevent disputes from arising. Clear records will enable you to keep track of your obligations and ensure you comply with them.   

For example, you should document all your action points under a customer contract. If you have delivered a large order to a customer’s premises as part of your contractual obligations, ensure you keep a record and have evidence of the delivery.

If you have agreed on specific delivery dates with your customers, make sure you make a note of such dates and tell all relevant staff involved to document those dates to ensure you comply with your contractual commitments. Similarly, if you have agreed on something with your customer over the phone, make sure you make a record of it so you remember your obligations and deliver on them. 

Keeping records also helps avoid disputes if the customer is at fault. If your customer misses a payment, make sure you document this and your attempts at chasing the payment. In this instance, having clear records could help urge the customer to pay and avoid you needing to take legal action against the customer for non-payment. 

By having clear records and documentation, you will be well-placed to monitor your contractual commitments and prevent disputes from arising. 

3. Communication and Contract Management 

Contract management is a critical way to prevent disputes from arising. As a supplier of services, you should constantly monitor your obligations under the contract and keep the customer updated as necessary. 

For example, as a supplier, you should:

  • monitor which obligations you have complied with under your contract; 
  • give the customer updates on your progress; 
  • identify any problem or risk issue that could result in delays under the contract; and
  • communicate with the customer about any issues or risks you identify. 

If you do stumble upon any risks during the contract term, you should communicate with the customer and work to mitigate those risks. For example, if an unexpected event occurs that delays your ability to perform your contractual obligations, ensure you inform your customers about it and work with them to resolve it. By doing so, you can clearly explain the incident to the customer and avoid complaints arising. 

Ultimately, communication is vital to managing good customer relationships. Updating customers and keeping in touch during a contract term will help you avoid mismatched expectations and confusion, resolve any issues and develop good working relationships. 

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Key Takeaways

There are various essential steps your business can take to prevent disputes from arising after signing a contract. To prevent a dispute from arising, you should:

  • understand your contractual obligations; 
  • keep track of those obligations; 
  • keep customers updated; and 
  • discuss any contractual problem issues openly. 

If you need advice on a dispute after signing a contract, our experienced commercial lawyers can assist 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.

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Sej Lamba

Sej Lamba

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