Resolving business disputes
Disputes arise from time to time as part of doing business. They can range in severity and, depending on the complexity, can cost time and money.
Resolving business disputes quickly and efficiently is in everyone's best interest. While you should try to resolve disputes yourself, sometimes you may need to seek help from others.
Steps to resolving business disputes
There are 5 common steps to resolving business disputes.
Step 1: Understand the dispute
Understand your legal requirements and check your contractual obligations carefully. There may be certain arrangements about how disputes must be addressed.
Identify the key issues behind the dispute. Keep track of events that happened before the dispute and try and clarify any misunderstandings. Read contractual obligations (these may be the terms and conditions you agreed to by ticking a box or in a written contract) carefully to ensure you have understood the scope of what was agreed. Your contract may have specifically addressed how disputes must be resolved.
Checklist—understanding my dispute
How did the dispute start
Check the facts
Identify the issues
Consider misunderstandings
Key outcome
Identify potential outcomes
Reality check
Step 2: Talk to the other party
- Before contacting the other party, think about the outcome you want to achieve. Think about any compromises you are prepared to consider, for example, if you claim you're owed money, how much would you accept to settle the dispute? How much will it cost you to chase the debt through court if negotiations fail?
- Contact the other party, explain the problem and make suggestions for possible solutions.
- Listen carefully to what they say and put yourself in their position. Try to see their perspective, even if it's difficult to do so.
- Stay calm and make a genuine effort to work with the other party to resolve the dispute amicably.
Good communication is essential for managing relationships (both over the phone or face to face). Effective communication involves clearly transmitting a message and receiving acknowledgment that the message has been received and understood by your intended audience. It also means providing acknowledgment to others that ensures they feel heard and understood.
Key communication skills can always be developed or improved. You can access resources on communicating effectively to increase your chances of resolving the issues and avoid having to take any further steps.
Read tips on how to to negotiate and compromise an agreement. For support to plan for an important business negotiation, the free Mentoring for Growth program can connect you with volunteer business mentors who can share general insights, options and suggestions.
Keep a written record of any discussions for future reference. It's good practice to send a follow up email asking the other party to confirm that what is written reflects their understanding of what was said or agreed. State that if you don't receive a response within a reasonable (specified) time, then you'll take it that this follow up summary was accurate.
If you have negotiated an agreement, put it in writing using words that you both agreed to and understand. You should all sign the agreement and ensure everyone has a copy of the agreement signed by everyone (an executed copy).
Step 3: Write to the other party
If you are still in dispute, put your concerns in writing. Allow the other party to consider your point of view and give them time to respond before you do anything else.
Tips for writing a letter of concern
- Who – Address your letter to the person responsible for supervising the person or area you are having trouble with, or write to the head of the business or organisation.
- Branding – Add your business logo or brand at the top of your letter (if applicable).
- Content – State your concerns clearly and briefly. Provide relevant background, identify options and provide contact details. Make it clear that you want to resolve the situation professionally and quickly. Avoid laying blame.
- Language – Be polite and professional. Avoid abusive, aggressive or emotional language.
- Attachments – Attach copies of relevant paperwork to your letter, for example, a copy of your contract, an email, a list of specifications, a quote or an invoice.
- Copy – Make a copy of your letter and keep it.
If you're having problems with a product or service provider, a good option may be this letter of concern template to let the supplier know about the issue and provide them with an opportunity to resolve the problem.
If the dispute relates to an outstanding payment, this letter of demand template may be the next option. It can also be used as evidence if the situation needs to be escalated to a court or tribunal.
Step 4: Seek help from a third party
There is a range of assistance available to help small and medium-sized businesses resolve disputes. Alternative dispute resolution (ADR) involves an independent third-party who works with both parties in dispute to help them find an amicable agreement. ADR is undertaken before going to a tribunal (e.g. the Queensland Civil and Administrative Tribunal) or court.
The goal of ADR is to help you to find a solution that is agreeable to you both. This process may include informal assistance, mediation or other options.
Use our dispute assistance finder to understand which service you should contact to help with your dispute.
For some types of disputes, there is no third party that offers ADR. You could try to develop or improve your negotiation and communication skills and try a different strategy at steps 2 and 3, or you can skip to step 5.
Step 5: Go to court or tribunal
If your dispute is unresolved after seeking third party assistance, you should seek independent legal advice about your other options.
While some disputes may be heard by a tribunal or court, you should consider this carefully as it can be very expensive, time consuming and stressful.
Dispute assistance
Once you have made a genuine attempt to resolve a dispute using the first 3 steps above, you may be able to request assistance from a third party. In some disputes this may involve applying to a state or federal ombudsman or commissioner.
The service you choose will depend on the nature of your situation. Most government agencies, ombudsmen and commissioners can't decide disputes or take them to court on behalf of one party. Often, they provide access to ADR before a party to the dispute takes their own legal action in a tribunal or court.
Some disputes lack third-party dispute resolution services, and you must resolve the dispute yourself or go straight to court or tribunal.
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The Queensland Small Business Commissioner (QSBC) may be able to assist tenants and landlords to informally resolve commercial lease disputes. You may also be able to access low cost mediation for eligible small business lease disputes and retail shop lease disputes.
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A contract is an agreement for supplying goods or services, made in writing, verbally, or by accepting an offer and terms.
If a business believes an agreement related to their trading with another business has been breached, it is likely a contract dispute.
For example, your business may be in a contract dispute if you have a dispute with:
- the manufacturer or supplier of goods you sell to consumers (e.g. watches you sell but don't make yourself)
- the manufacturer or supplier of parts or components you use in repairing or making consumer goods (e.g. assembled cabinets from a supplier you use to build caravans you sell)
- the supplier of services you use to promote or operate your business (e.g. a marketing or website service you engage).
For disagreements with suppliers, ask whether they have complaints handling policies and procedures in place to manage your dispute.
A contract dispute is considered a civil matter. Currently, there is no Queensland government agency that provides ADR in business-to-business contract disputes.
Attempt to resolve the dispute yourself using the steps to resolving business disputes. If unresolved after attempting step 3, consider engaging a private mediator or adjudicator. Alternatively, skip to step 5 and apply to a Tribunal or Court.
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Some government agencies and industry organisations provide alternative dispute resolution services aimed at specific business sectors.
Learn more about Australian industry ombudsmen and dispute resolution.
Australian airlines
Australian Government agencies (including Australia Post)
Body corporate, community management and strata titles schemes
Building and construction
Energy and water disputes
Finance, insurance and investment disputes
Franchise disputes
Leasing disputes
Find out more about leasing disputes
Legal disputes
Privacy
Public agency disputes (including with local councils or state government)
Real estate agents
Retail and wholesale disputes
Small business (general , non-leasing related disputes)
Telecommunication disputes
Trademark and intellectual property disputes
- IP Australia provides information, but does not offer ADR services
Training disputes
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Some business disputes involve goods or services not intended for resale or trading.
For example, a business buying a microwave for a staff kitchen may be considered a consumer under the Australian Consumer Law, part of the Competition and Consumer Act. Whereas a business using a commercial fryer to prepare food for customers is likely a trader, if they were in a dispute with the supplier of that fryer.
Whether a business meets the definition of a consumer will ultimately determine whether the dispute may be resolved, or may be suitable for conciliation by the Office of Fair Trading (OFT) (as a consumer dispute) or must be heard by a court or tribunal (as a business-to-business contract dispute).
OFT also provides information and advice to consumers and traders about:
- requirements for businesses to comply with their legal obligations
- how OFT monitors and regulates the marketplace
- choosing and using safe products.
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The Queensland Civil Administrative Tribunal (QCAT) is an independent tribunal which provides accessible, quick and inexpensive dispute resolution services. QCAT makes decisions on a range of matters and can be used to resolve disputes about debt, consumer, trader, building and minor civil disputes.
QCAT hears eligible consumer and business-to-business disputes over contracts for the supply of goods and services such as:
- repairing a defect in a motor vehicle
- a claim by a consumer against a trader
- a claim between suppliers and traders.
Dispute assistance finder
Use our dispute assistance finder to help you determine the most appropriate third-party dispute resolution service for your situation and how you can seek help.
You must ensure that you have taken steps to resolve your dispute before approaching a third party for assistance.
All information provided in the tool is for businesses based in Queensland. For businesses based outside of Queensland, refer to the Australian Small Business and Family Enterprise Ombudsman.