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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Private Limited Company V. Textile Wholesaler

Date of Claim Raised: 12/07/2021
Conciliation Date: 06/08/2021
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement

Invoice Settlement Mediation was entered into by the claimant, a Private Limited Company engaged in manufacturing of Textile Business, who supplied Rs. 1, 38,920/- worth of textile to the Defendant, a wholesaler of Textiles. A verbal agreement to pay the invoice in four instalments was entered into between the claimant and defendant, with no witnesses, each payment corresponding to Rs. 34, 730/-. The parties had known and worked alongside each other for years and had done deals like this previously; therefore, this sort of arrangement was not uncommon.

The defendant cleared the first three instalments as agreed; however, he defaulted in clearing the last payment, the timeline for which was set within 3 months after the 3rd instalment payment.

When it came to paying the fourth and last payment, the defendant defaulted, and he completely denied the existence of any such verbal contract. The claimant sent constant payment reminders to the defendant, but there was no response from the defendant's end.

The Issue

Proceedings were instigated, and the parties decided to try mediation by appointing PrivateCourt as the mediating party. To achieve this and find the best possible solution, PrivateCourt first initiated a few meetings and then discussed the problem at hand.

The defendant admitted that his business took a severe beating due to the cancellation of orders and advised that his company was financially nowhere close to paying the disputed amount immediately or as a one-time payment; he also requested not to levy any interest or penal charges considering their long term relationship. The claimant alleged he was under no obligation to abide by this request as there was a loss of trust and faith in this matter. Neither party was willing to move, wanting their emotional side to do more of the decision-making rather than their minds. Several options were presented to both sides on how they could resolve this matter. PrivateCourt assisted both parties to arrive at a settlement.

The Process/Undertaking/Action

After a careful review of details submitted by both parties, which included Ledger accounts, Outstanding invoices, Email conversations, Purchase order, and Whatsapp chats, a solution was arrived at to favour their position which would also help to continue the business relationship.

During the meetings and discussions, PrivateCourt was unbiased and neutral.

The Settlement
    The Respondent agreed to pay the outstanding amount of Rs. 34,730/- by a bank transfer to the Claimant's bank account on or before February 2022. The schedule of payment is as follows:
  • 30/08/2021 - Rs. 5,000/-
  • 30/09/2021 - Rs. 5,000/-
  • 30/10/2021 - Rs. 5,000/-
  • 30/11/2021 - Rs. 5,000/-
  • 30/12/2021 - Rs. 5,000/-
  • 30/01/2021 - Rs. 5,000/-
  • 28/02/2021 - Rs. 4,730/-
The Inference
  • The Negotiation took 1 day compared to the 8 months this invoice dispute had already gone on.
  • The Negotiation cost each party a negligible amount saving them thousands they had to spend on legal fees and the thousands had they continued with Court action.