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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Digital Marketing Company V. Online Maid Service Provider

Date of Claim raised:23/02/2022
Date of Conciliation: 02/03/2022
Date of Settlement: 31/03/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary:

This dispute arose between a digital marketing company based in Bangalore and an online maid service provider based out of Hyderabad. While the respondent, in this case, the service provider, entailed the services of the digital marketing company for lead generation and online promotions, they in turn provided services directly to customers with local maid assistance. The respondent had gone through their seed funding round and had ambitious plans of expansion for which they needed digital marketing assistance. The claimant agreed to provide these services, which included digital marketing, online product placements, and an increase in web traffic through SEO and SEM services as a complete package. Specific service levels for each activity were agreed upon with weekly, monthly, and quarterly reviews. The total contract value of the project was to be Rs. 75,00,000/- where there was to be a 25% advance. The dispute occurred, when post delivery of services, the respondent was given an invoice of Rs. 24,13,242/- towards lead generation charges. The respondent denied payment of this invoice entirely, citing a breach of service levels.

The Issue

While there were service levels agreed upon for various activities conducted, there were reviews conducted periodically for any amendments or changes that would be needed for improvements if any no major objections were brought up by the claimant through the service period.

In the case of the invoice in question, the ratio of contactability of willing customers @ 65% to the leads generated was the only service criteria defined. However, when the invoice was raised, the claimant denied the payment saying that the conversion of leads to customers post-contact was too low and that they would not make the payments. The cost of lead generation being very high with no credit lines as industry standards are, the denial of such an invoice would send the claimant into a difficult situation. PrivateCourt was approached to settle this issue.

The Process:

The mediator, in this case, went through all the SLAs agreed upon and looked at all review documents exchanged. Finding that there was no red fag raised through the period of the service offered, the respondent was approached. The mediator explained how all markers on the service levels, especially in the case of the lead generation activity, had been met and how the respondent had not raised any objection to the functioning of this activity through the service period was brought to their notice. Meeting with some reluctance to accept the claim, the mediator explained how negative publicity would hamper the operations of a startup and how that might prove detrimental in going into round ‘’a’’ of funding. The respondent agreed to settle the invoice in its entirety.

The Settlement Terms

The respondent agreed to settle the entire outstanding amount of Rs. 24,13,242/ on or before March 31, 2022, failing which the claimant would charge a penal interest of 21% p.m till such outstanding is cleared.

The Inference:

Settlements are often a matter of perspective, and professional mediation helps bring the consequences of breach of agreements to the fore and settle disputes with fewer hassles.