Disputes are an unfortunate reality in business. Even with the best intentions, things can go wrong. A client might not pay on time, a supplier might deliver late, or a contract might be unclear about each party’s responsibilities. If you are a small or medium-sized business, these issues can be costly, time-consuming, and stressful.

The good news is that most commercial contract disputes can be resolved without ever stepping foot in to a court. Here we discuss the main ways to resolve disputes and share some top tips to help you protect your business. 

Common causes of contract disputes

Before we talk about how to resolve disputes, let’s look at what causes them:

Misunderstandings about what was agreed

Failure to meet deadlines or performance standards

Late or non-payment

Changes to the contract not put in writing

Unclear terms or poorly drafted contracts

Knowing where things typically go wrong can help you spot problems early. We would always recommend that you have commercial contracts drafted by a legal adviser or reviewed by an adviser before signing them. This could save you a lot of time and money in the future, if something goes wrong and the contract wasn’t right to begin with.

Steps to resolve a commercial contract dispute

Start with a conversation - It might sound simple, but a direct conversation can often solve the problem quickly. Miscommunications or minor issues can often be cleared up with a phone call or meeting.

Check the contract - Go back to the written agreement. What does it actually say about the issue? Does it include any dispute resolution clauses, like requiring mediation or arbitration before court?

Negotiate a solution - If both sides are willing, it’s often possible to agree on a compromise. For example, payment in instalments, a discount, or revised deadlines.

Use mediation - Mediation involves an independent third party helping both sides reach a settlement. It’s confidential, usually quicker and cheaper than court, and you stay in control of the outcome.

Consider arbitration - Arbitration is more formal than mediation and can be binding, but still avoids court. It’s often used when contracts specify it as the method of resolving disputes.

As a last resort – Court action might be available If all else fails, legal proceedings may be necessary. This is usually the most expensive and time-consuming option, so it’s best seen as a last resort.

If steps 1-3 above do not solve the problem, it is sensible to take early legal advice on your position so that you can decide the best next steps to take. You may not need to formally instruct a solicitor to handle the dispute for you at that early stage, but it can often be helpful to understand your legal position, any risk and potential financial exposure of a dispute.

Top tips to avoid and handle disputes

Get it in writing – Always make sure your contracts are clear, detailed, and up to date.

Use clear language – Avoid jargon. Make sure both sides understand their rights and responsibilities.

Include a dispute resolution clause – This sets out how disputes will be handled (e.g., mediation first), which can save time and money later.

Act early – If something seems off, don’t ignore it. Early action can stop a small issue from turning into a big one.

Seek legal advice early – A quick chat with a solicitor can clarify your position and help you avoid missteps.

Final thoughts

Disputes are never pleasant or easy to deal with, but they don’t have to derail your business. With the right approach — and some good advice — you can often resolve issues quickly and keep your commercial relationships intact.

If you’re dealing with a contract dispute or want help drafting better contracts in the first place, feel free to get in touch. Contact Sarah Naylor on 01302 320621 or at sarah.naylor@switalskis.com.