RESOLUTION OF COMMERCIAL DISPUTES

One of the greatest challenge that hinder business progress is unresolved disputes. If left unresolved, disputes interfere with business interests and achieving of the business goals. It also exposes the business to loss, both financial loss and loss of good customers/clients.

What is a commercial dispute?
A commercial dispute, is a conflict or a disagreement between persons in a commercial relationship. The conflicts mostly arise from failure by one party to perform the contract terms and conditions. Particularly, poorly drawn contracts present an avenue for disagreements because the parties rights and obligations may not clear.

Examples of Commercial disputes
Commercial disputes are diverse because they may arise between individuals and business entities. They also vary in size and complexity. Commercial disputes may include:

1. Supply chain disputes
These may include failure to supply ordered goods or services, non-payment of agreed fees or purchase price, supply of faulty goods or poorly performed services which don’t meet the agreed specification.

2. Shareholders/directors/Partners disputes
Common disputes between shareholders, directors or business partners include failure to perform obligations, breach of fiduciary duty, misuse of business funds, misunderstandings on the role of each party, division of business funds or assets, poor performance by either party, fraud, subjecting the business to risks, breach of trust etc.

3. Fiduciary Disputes
Parties in a business relationship undertake to act in good faith for the best interest of their businesses failure to which disputes are likely to occur. Failure to act in good faith may include disclosure of confidential information, non-disclosure of material facts during negotiations and failure to comply with terms of a contract with an intention of frustrating the contract.

4. Real estate disputes
Real estate disputes involve disagreements related property contracts. They include unfulfilled terms of a lease agreement, conflict between developers and property owners, landlord-tenant conflicts, breach of loan agreements where a property has been charged by a financial institution, damage to property etc.

5. Intellectual property (IP) disputes
IP disputes include IP infringements of copyright, patent and trademark licences, passing off, IP ownership, IP misuse etc

How should commercial disputes be resolved?
Disputes may be resolved through courts of law, commonly known as litigation or through or through alternative disputes resolution (ADR) mechanics. In Kenya there are various forms of ADR which include negotiation, conciliation, mediation, arbitration. Although for a long time arbitration has been used to resolve many commercial disputes in Kenya, mediation is becoming a more favorable form of ADR. The mediation process involves assigning a neutral third party or “mediator” to work with the parties in an attempt to reach an agreement or compromise. The process is faster, confidential and besides resolving the disputes it helps the parties to retain their relationship and continue doing business together.

Why you need professional legal support with commercial dispute resolution
Unless addressed in the right manner, commercial disputes can escalate and subject the business to grave loss. As a result of unresolved or poorly resolved disputes many businesses have collapsed and others suffered significant financial and reputation loss. While legal support is not mandatory in resolution of commercial disputes, working with a legal expert is highly recommended. The expert will assist a business owner in analyzing the dispute and choosing the most appropriate mode of resolving the dispute.

© Copyright- Gladys Mwangi & Company Advocates 2024