PRO TIP when you face a Business Conflict

Craft Clear Agreements: When an agreement is reached, ensure it's crystal clear. Clearly articulate the terms, responsibilities, and consequences. Clarity prevents future disputes and lays a solid foundation for cooperation.

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Chemical Manufacturer V Distributor

Date of Claim raised: 07/07/2022
Date of Conciliation: 14/07/2022
Date of Settlement: 14/07/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

The dispute is between a Chemical Manufacturer based out of Indore as the claimant and a distributor of chemicals based in Khargaon, Madhyapradesh, as the respondent. While the parties had a long working relationship, there was a particular order placed by the distributor for a specialised dye that had to be imported. The order was to be delivered in 30 days, and the same was to be paid for 15 days from the date of delivery. This was a back-to-back order placed by the respondent, who in turn, had a client who would purchase the same in bulk. The total amount payable was Rs. 2,00,000/- including freight charges.

The Issue

While the product was delivered, there was a delay in customs clearance, and the product was delivered late by 5 days. While the respondent showed his unhappiness at the delay, still he accepted the consignment and signed the airway bill for the same. The dispute occurred when the payment was not made post the 15 days. The argument put forth was that due to the delay, he had a cancellation of the order; hence, he could not pay the amount to the claimant. While there were several rounds of discussions, no headway could be made in the case, and the same was handed over to PrivateCourt for settlement.

The Resolution

The mediator, in this case, established the facts of the claim and then approached the respondent for a discussion. While the same argument was put forth of the loss of business, what impressed upon them was the fact that despite the delay, they not only accepted the consignment but also did not appraise any issues till the end of the 15-day period, which showed malice in their intent. Also, it was discussed that the claimant, being a very large manufacturer, losing credit lines in supply would disrupt the respondent's business. Once the impact of this was impressed upon him, the respondent requested a deferred payment option. Considering the business loss he had made and in consultation with the claimant, an agreement was reached.

The Settlement Agreement

The Respondent agreed to pay the total dues of Rs. 2,00,000/- on or before four months from the date of settlement i.e. on or before the end of November 2022.

The Inference

Bringing into perspective the possible loss of business often brings out solutions.