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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Cycle manufacturing company V Distributor

Date of Claim raised:16/08/2021
Date of Conciliation: 15/09/2021
Date of Settlement: 15/09/2021
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

This dispute was between a Cycle manufacturing company based in Kolkata and its distributor based in the same region. The manufacturing company (the Claimant) had been engaged in manufacturing and supplying bicycles to the Distributor (the Respondent) for a period of over a year, and the credit period was extended from an initial 30 days to 60 days. The business relationship had been cordial through most of the times; however, the distributor’s shop was engulfed in a huge fire, which led to major losses.

The Issue

There was an accrued outstanding of Rs. 1,76,949/-, which was yet to be settled, and despite extended timelines, the debt was not settled. The initial argument made by the respondent was that he would need to wait for the insurance claim to be paid, and a window of further 60-days was agreed upon. The dispute was headed to litigation when this timeline as well was overshot with no clear indication of a final date of closure. PrivateCourt was entrusted with the task of trying to mediate a settlement.

The Resolution

The mediator, after going through the overall exchanges of communication and establishing the credibility of the claim, approached the respondent for a discussion. Through the various arguments put forth by the respondent, the mediator established that the insurance company had only approved a part of the claim; thus, the respondent was trying to shun away his responsibility to pay parts of debts, which were not against any collateral. Once this was established, the mediator explained to the respondent how breach of this contract could have serious repercussions to his comeback as he would lose his credibility in the market and lose all credit facilities offered not only by the claimant but from every manufacturer as a whole. To this, the respondent requested for a deferred payment option, and in consultation with the claimant, a settlement was agreed upon.

The Settlement Agreement

The Respondent agreed to pay Rs. 30,000/- on or before 27th September 2021, and the remaining Rs. 1,46,949/- amount in 5 equal instalments of Rs. 29,389/- each between from 27th October 2021 till 27th February 2022.

The Inference

A third party professional with a strong sense of natural law can bring about positive solutions even in cases where there is malice in intent.