Avoiding the Courts in Business

In every business, there are a lot of transactions that have their own set of conditions that parties involved must conform with. Failure to comply may bring catastrophic expenses due to lawsuits. Remember that it is not only the direct expense involved that is costly, but also the enormous amounts of wasted time that a legal battle entails.

Before legal troubles and court dramas become a staple in every business transaction, consider a few reminders to reduce the chances of being in court:

Deal only with reputable people. Before anything else, it is a must that you know the character of the person you would be dealing with. No matter how juicy an opportunity is, it is rarely worth the risk to deal with someone likely to act in bad faith.

Keep agreements in writing. Trust is a noble value, be it in your business or your personal life. When it comes to business relations, trusting or being trusted is just the first step in being assured of quality service. Agreements would most often contain numerous conditions—what happens when the supplier fails to deliver on time, how the materials will be delivered, how long the service will be rendered, who performs the service, what partners’ rights are, and so much more. Your instincts might tell you that you do not need to be so formal with a long-time supplier (after all, they have been with you for quite a long time and have not yet failed to meet your expectations), but it is still better to put every agreement into writing. A contract not only makes things formal, but also signifies that the parties involved are assumed to have understood whatever agreements are contained in it, and are legally bound to conform with them.

Understand the law. In every business transaction, there are things that may not be in your contract that you must absolutely take note of. Some of these are legal interest when in delay; rules and securities specially set by specific professions or by the law; as well as rights when the other party refuses to accept or comply with your demand contained in a demand letter. To avoid legal problems, try to understand the different laws that affect your business, and the court cases and rulings to see how the law reacts to different events.

Be on time. For obvious reasons, being on time is one of the best ways to avoid legal trouble. It is not that hard, but some businesses just do not seem to get the concept of time. If you have a specified date of performance of obligation, comply with it. If you predict that you might have trouble doing so during the specified date, tell the other party and do not leave them hanging. You can also suggest other options or hire an agent to perform your obligations if it is allowed by the other party. There are so much legal cases due to delayed performance of obligation. Do not allow your business to be the next landmark case.

Choose mediation over litigation. Before deciding to go to court, why not try letting off steam first? Grab some tea, watch some television shows or have a good night’s rest. Think twice, and most of all, think clearly. For the aggrieved party, you spend lawyer’s fees and other processing fees, and then you cross your fingers for immediate results. For the accused, it’s basically the same thing. Both of you lose money, and, more precious than that, time.

If it really is that big of a deal, go ahead and realize that courtroom drama you have been wishing for. But for small claims, why not settle the matter with the other party? Maybe you can reach an agreement to compensate for the damages the other party has caused you. Maybe there was a simple misunderstanding and nothing was done in bad faith. Communicate with the other party first and as much as possible, settle things outside of court.

*Originally published by the Manila Bulletin. C-6, Sunday, October 19, 2014. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.