Contracts are designed to make your business run smoother\nand to protect you from unnecessary risks. However, business disputes between\ncontract partners are still commonplace.\n\n\n\nWhat is the best way to handle contract disputes? You have\nthree main tools to resolve a business dispute. You can use mediation,\narbitration, or litigation. Each tool has its pros and cons. The right one for\nyour business will depend on your goals and the nature of the dispute. \n\n\n\nHidden Costs of\nContract Disputes\n\n\n\nEvery contract dispute has obvious costs and hidden costs.\nThe obvious costs include loss of revenue, cost for securing new supplies, and\nother easily measurable costs. \n\n\n\nBut, often the hidden costs end up being even more than the\nobvious costs. Hidden costs include using resources to resolve the dispute,\nloss of agility to take advantage of new opportunities, loss of reputation with\nyour customers, and distracting key members of your organization from their\nprimary responsibilities. \n\n\n\nThe best way to limit these hidden costs is to avoid\ndisputes where possible and to resolve them as quickly as possible. \n\n\n\nWhat is Mediation?\n\n\n\nMediation is often thought of as the softest form of\ncontract dispute resolution. Mediation is nothing more than a negotiation\noverseen by a professional mediator.\n\n\n\nThe mediator helps keep the conversation flowing, helps\nfacilitate compromise, and can point out to both sides the risks of proceeding\nto litigation instead of coming to an agreement in mediation.\n\n\n\nBenefits of Using\nMediation for Contract Disputes\n\n\n\nThe key benefits of using mediation to resolve contract disputes\nare:\n\n\n\nLower costs than arbitration or litigationFaster than arbitration or litigationConfidential settlementsCreative solutionsProtects the relationship between the partiesNo outside solution is imposed on the two sides\n\n\n\nWhen you enter into mediation, there is no set outcome. Neither side has to lose the mediation. You can craft creative solutions that preserve the relationship, and the resolution can be completely confidential.\n\n\n\nDo you want to Win at Contract Management? Schedule Live 1 on 1 Demo.\n\n\n\nMediation allows you to use common sense business principles\nto resolve the issue. It is also faster and much cheaper than other forms of\ndispute resolution. \n\n\n\nDrawbacks of\nMediation\n\n\n\nMediation isn\u2019t perfect. Some of the drawbacks to mediation\ninclude:\n\n\n\nThe open-ended process can be abused by one sideMay still require litigation to enforce the agreementDoesn\u2019t work if trust has completely broken down between the two sides.\n\n\n\nMediation is a poor choice if one side refuses to engage in the process. If there is a significant disparity in the bargaining position of the two sides, one side can easily bully the other side in mediation.\n\n\n\n Never lose a contract again! Work more effectively, increase your revenue, centralize & secure your contracts. Available anywhere, anytime & on any device.Get your Free Demo today! \n\n\n\nWhat is Arbitration? \n\n\n\nArbitration is a private court system. Instead of using the\nstate or federal court system, the two sides argue their case to a private\narbitrator. \n\n\n\nArbitrators are often lawyers or retired judges. Many arbitrators\nhave industry-specific expertise beyond what you would find in the court\nsystem. \n\n\n\nPros and Cons of arbitration for Contract Disputes\n\n\n\nLet's start with the benefits of Using Arbitration\n\n\n\nThe most notable benefits of arbitration for resolving contract disputes include:\n\n\n\nStreamlined processFaster resolutionBinding outcomesLess expensive than litigationResults often privateGreater chance of having someone with deep\nknowledge of the industry making decisions about the contract dispute.\n\n\n\nEven though you have to pay an arbitrator, arbitration is\nalmost always less expensive than litigation. This is because the procedures\nfor presenting your case in arbitration are streamlined. Often hearings happen\nonly through written submissions or over the phone.\n\n\n\nArbitration is much faster than litigation. \n\n\n\nUnlike mediation, the arbitrator has the authority to issue binding\nrulings on the two sides, even if one side doesn\u2019t want to cooperate. \n\n\n\nDrawbacks of Arbitration\n\n\n\nArbitration does have some problems:\n\n\n\nLitigation may still be required if one side refuses to follow the orderLimited appeal rightsHarms relationship between the two sidesArbitrators more likely to have a specific industry bias (buyers vs. vendors) than a judgeThe arbitration may move too fast for complex disputes\n\n\n\nIf one side is refusing to participate in any form of\ndispute resolution, you may still have to use litigation to enforce your\nrights, even if you won in arbitration. \n\n\n\nArbitration tends to favor bigger companies over smaller\ncompanies because of the way the system is designed. \n\n\n\n\n\nWhat is Litigation?\n\n\n\nLitigation means using the state or federal court system to\nresolve a dispute. Litigation officially starts when one side files a lawsuit. \n\n\n\nDepending on where the lawsuit is brought, a judge or a jury\nis the ultimate fact finder. The judge or jury determines which side prevails\nand what damages, if any, should be awarded. \n\n\n\nAlmost every court system is overburdened with lawsuits. It can take years for even a simple case to get through the system. Most lawsuits never go all the way to trial. Instead, most are settled during the discovery process. \n\n\n\n Get online in minutes, implement in hours, realize ROI in weeks! Easy-to-use, helps you increase productivity, contracts & revenue. Available anywhere, anytime & on any device.Try a Free Demo today!\n\n\n\nBenefits of Using\nLitigation for Contract Disputes \n\n\n\nLitigation is often the last resort of companies looking to\nresolve a contract dispute. But, it does have several advantages:\n\n\n\nThe force of law behind all decisionsFinalityAccess to a wide range of tools to gather\ninformation about the disputeDeadlines than increase chances of settling a\nlawsuit\n\n\n\nOne side cannot just ignore a judge like they can a mediator\nor an arbitrator. If you obtain a judgment, you can enforce that judgment\nthrough garnishments, liens, or even having the sheriff or U.S. Marshals seize\nassets. \n\n\n\nLitigation may be slow, but it eventually produces a final judgment. \n\n\n\nDrawbacks\n\n\n\nThe reason there is so much information about alternative\ndispute resolution is that litigation has many serious drawbacks. Some of the\nmajor problems with litigation include:\n\n\n\nExpensiveSlowUnpredictable resultsOften destroys relationship between two sidesPublic resultsMay cause reputational harmLengthy appeals processFavors side with deeper pocketsLegal resolution may lack any business rationale\n\n\n\nIf you take your case all the way to trial, you may end up\nwith a decision that makes no business sense. You could get a legal win and\nstill be facing significant business losses. \n\n\n\nHaving your day in court is expensive. Many companies find\nlitigation isn\u2019t worth the expense unless there are millions of dollars at\nstake. \n\n\n\nThe lengthy appeals process means that your case may stretch\non for years even after you\u2019ve already gone to trial.\n\n\n\nMany businesses find litigation to be too unpredictable, too slow, and too expensive. Litigation is the last resort for many businesses dealing with a contract dispute.