You cannot just ignore it when an employee, supplier or service provider violates a contract with your company. Ignoring contractual failures can set a dangerous precedent and also leave your company to absorb losses caused by someone else’s behavior.
You need to act swiftly to enforce your contract and compel the other party to follow through with their obligations to you. Of course, you probably don’t want to waste time and money by going to court over a supply issue or employment contract.
Fortunately, there are two legal processes that can help businesses resolve significant contract disputes outside of the courtroom.
Arbitration has a negative connotation for some people because businesses sometimes try to force customers or workers into binding arbitration through contracts. Mandatory, binding arbitration can be unfair to consumers and employees.
However, when entered into freely by both parties, arbitration can resolve issues quickly and effectively. It is much like court in that there is a neutral third party who reviews the situation and makes a decision about what outcome is appropriate and fair. You can choose non-binding arbitration, which allows for more discussion and negotiation about the final decision reached.
As with arbitration, mediation involves a neutral third party helping people resolve a contract conflict. Instead of acting like a judge, however, a mediator serves to help facilitate compromise. They communicate with both parties and try to find a solution that meets everyone’s needs. They can even go back and forth between rooms or even different buildings to help people resolve high-conflict situations outside of court.
Either mediation or arbitration could help you and the other party in a contract dispute resolved the issue without needing to go to court. It’s a good idea to look at the pros and cons of both.