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Commercial disputes are a part of doing business (unfortunately)
- 3%-5% of small businesses experience a serious
Develop good business practices and avoid business disputes - - PowerPoint PPT Presentation
Develop good business practices and avoid business disputes - - PowerPoint PPT Presentation
UNCLASSIFIED Develop good business practices and avoid business disputes Webinars for Law Week 2015 UNCLASSIFIED UNCLASSIFIED Commercial disputes are a part of doing business (unfortunately) 3%-5% of small businesses experience a
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- What can you do to prevent a dispute arising?
- If it does arise, how can you resolve it
effectively?
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Four broad areas of state government assistance for small business
Policy / Legislation Assistance Program design /delivery Dispute resolution / fair market practices Regulatory burden reduction SMALL BUSINESS COMMISSIONER
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Type of disputes?
- Any commercial agreement between businesses, or
business-to-government or not-for-profits
Licensing / agency agreement Franchises Buying a business Leases Supply chain Distribution Services
- No definition of ‘small business’
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For example …
- The business sale contract had a ‘not compete’ clause, but
the vendor is operating in breach of this
- The lease says 300 sq. metres but the shop is only 237 sq.
metres
- The accountant is not fulfilling the terms of our contract
- I signed up for Search Engine Optimisation but it’s had no
effect, and I’m locked into a 24 month contract
- The franchisor is not providing me with the number of
business referrals promised
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Statutory referral of some disputes
Retail Leases Farm Debt Owner Drivers / Forestry Contractors
75% of our business
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Our dispute resolution services
- Mediation
$195* per party
half day session CBD, Metro or regional locations Scheduled within 6-8 weeks Can occur rapidly if parties agree
- Information & Assistance
No Cost
- Pre-mediation dispute resolution
No Cost
* For most mediations. May change in 2015-16
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High levels of customer satisfaction
2013-14 feedback from mediation participants
93.6% 93.5% 93.4%
60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% Total Applicant Respondent
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Completed disputes 2013-14
83% mediation settlement rate Settled prior, 26.6% Can’t find/ No mediation/ Refusal, 26.5% Successful mediation, 38.8% Unsuccessful mediation, 8.1%
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Avoid the costs of litigation
$174 $141 $224 $269 $2,130 $15,808 $1,308 $1,297 $1,119 $2,204 $9,069 $25,352
$- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 <$1k $1-2k $2-5k $5-10k $10-20k >$20k
Direct costs Total Costs
Amount of dispute Costs incurred per party
Survey of businesses in certain business-to-business disputes at VCAT in 2012
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... and other adverse effects of litigation
Litigation had an adverse impact on:
ORIMA 2013 research for VSBC: certain business to business disputes at VCAT in 2012
0% 10% 20% 30% 40% 50% 60% 70%
Your health and wellbeing Your overall level of work- related stress The performance of your business
0-4 employees 5+ employees
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... and other adverse effects of litigation
ORIMA 2013 research for VSBC: certain business to business disputes at VCAT in 2012
0% 10% 20% 30% 40% 50% 60% 70%
Your health and wellbeing Your overall level of work- related stress The performance of your business
0% 20% 40% 60% 80%
% ‘High’ impact Litigation had an adverse impact on:
0-4 employees 5+ employees
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Build good relationships and prevent disputes
- Put it in writing. Don’t rely on oral assurances.
- Read and understand a contract before you sign it
- Recognise mutual interests (not a win-lose arrangement)
- Communicate early and often
- Be accountable and responsible for your obligations
- Treat each interaction as the start of a long term relationship
- Interact with businesses of like-values
- Conduct yourself professionally
- Have pre-agreed, effective, quick and fair dispute resolution
procedures
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Top Retail Lease dispute characteristics
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 1 2 3 4 5 6 7 8
2010-11 2011-12 2012-13 2013-14
- 1. Payment of outstanding
monies by tenant
- 2. Repairs and Maintenance
- 3. Value of expenses,
- utgoings, rent
- 4. Security Deposit
- 5. Premature termination of
lease
- 6. Options and renewals
- 7. Make good on expiry
- 8. Transfer/ assignment of
lease
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‘Unfair’ contract terms in business contracts
- No statutory protections for businesses signing up to
‘standard form’ contracts
- No cooling off periods for unsolicited sales
- Watch out for:
Unilateral variation clauses Extreme indemnities Roll-over contracts with impractical termination rights Unequal termination provisions / payout obligations
- Good news: announced extension of consumer protections to
small businesses
<20 employees; and Transaction <$100k in 1 year or <$250k in multiple years
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May Webinars – Law Week
- Mon11th 3.15 pm
Build relationships and avoid disputes
- Tue 12th 10 am
Retail leases
- Wed 13th 12.15 pm
Build relationships and avoid disputes
- Thu 14th 3 pm.
Retail leases
- Fri 15th 3.15 pm
Build relationships and avoid disputes
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