Disputes in business can occur for a variety of reasons, including contract breaches, unfair competition, consumer fraud and partnership disagreements. When unable to figure out a solution on their own, the damaged party may choose to take legal action.
Depending on the specific issue and situation, parties may choose to deal with the dispute in one of three ways.
According to the Program on Negotiation at Harvard Law School, litigation is the best-known type of conflict resolution. It involves lawyers on each side, a judge and sometimes a jury. Each side presents evidence, and the judge or jury makes a ruling based off of it. Although the judge makes these decisions in court, it is common for the parties to settle beforehand.
According to FindLaw, courtroom litigation can be expensive, and there are two common alternatives some companies choose to resolve disputes. Mediation is one of the alternatives. This involves a mediator, who is a neutral third-party who guides each side to an agreeable settlement. Each party presents their facts, and then the parties or mediator can conduct a question and answer session to learn more.
The mediator then uses diplomacy to offer creative solutions while working with all parties. There is negotiation among all parties as they come up with a decision.
Arbitration also involves a third-party participant, known as the arbitrator. During arbitration, the parties present information and evidence to the arbitrator. It is similar to litigation but more informal. The arbitrator then awards a decision based on each side’s presentation. This decision is often binding, with few options for appeal.