How to dispute-proof your company

What you need to consider – step by step

When entering into an agreement

It is important to know who you are doing business with. They may have financial difficulties or a history of late or non-payment. Some tips for identifying red flags:

• Check which legal entity (company registration number) is to be a party to the agreement. The contact person may sometimes have roles in several companies within the same group.

• Carry out a credit check and review annual reports.

• Request references.

An agreement is formed through matching declarations of intent and does not always need to be formalised in writing. However, written agreements are preferable. They help avoid misunderstandings and are easier to prove. In many cases, it may be advisable to have a solicitor or legal adviser draft or review the agreement. Here are some things to bear in mind to reduce the risk of misunderstandings:

• Avoid using synonymous terms in different parts of the agreement – reuse the same terms consistently and uniformly throughout.

• Check that the agreement does not contain contradictory information, e.g. if a price is stated as an approximate price, this should be reflected in all places where the price is mentioned.

Also ensure that all staff involved in entering into agreements (e.g. sales staff) are well informed about the specific terms and conditions applicable to the transaction, so that you do not risk missing any of your own obligations, such as providing warranty terms or general terms and conditions to the counterparty.

Depending on the type of transaction in question, it may also be worth considering including a dispute resolution clause in the agreement, see the article Avoid costly disputes – regulate jurisdiction clauses in your international agreements.

Identify and notify defects and problems promptly

Rules on the obligation to give notice of defects are set out in a large number of statutes and also apply as a general principle of contract law. The obligation to give notice means that a party wishing to assert a breach of contract must notify the counterparty within a reasonable time, failing which the right to remedies such as rectification, price reduction or termination may be lost.

Reasonable time is calculated from when the party discovered, or ought to have discovered, the defect. The Supreme Court recently emphasised, in the case NJA 2025 s 672 (see the article Highlights from the Supreme Court 2025), the importance of a buyer inspecting purchased goods upon delivery and giving notice of any defects promptly. Bear in mind therefore that you should:

• Have procedures in place to quickly identify and give notice of defects.

• Ensure that notice is given in writing.

• Check what the agreement says about how and to whom notice should be given.

What constitutes a reasonable time varies from case to case. In relations between commercial parties, particularly where the purchase is connected to ordinary business operations, the general rule is that notice must be given very quickly – within a day or a few days.

If you have instead received notice of a defect from the counterparty, consider whether it was given in time. If not, you should draw this to the counterparty's attention.

Do not forget to act promptly when the counterparty is late with payment. In the best case, you will resolve the issue immediately. You also avoid a situation where unpaid invoices accumulate, and you may wish to consider whether to withdraw from the agreement.

• Invoice regularly and follow up to ensure payment is made.

• Notify the counterparty immediately if payment is not received and ask for an explanation.

Document more

Many disputes could have been avoided if it had been possible to establish after the fact what was said and done between the parties. Bear in mind therefore that you should:

• Save and systematically archive important documents such as text messages, emails, internal notes and agreements.

• Document events and situations in writing or with photographs or video.

If communication takes place by telephone or at meetings, a useful tip is to follow up the meeting or telephone call with something in writing summarising what was said and what was agreed. This can be a simple text message or a short email. An added advantage is to also ask the counterparty to respond in writing to confirm or dispute what is stated in the message.

Concluding reflections

Dispute-proofing your company is fundamentally about being proactive. By drawing up clear and carefully considered agreements, ensuring that notices of defects are given promptly and in the correct form, and documenting communications and events on an ongoing basis, you significantly reduce the risk of costly disputes. Should a dispute nonetheless arise, these measures mean that your company will be considerably better placed. If you are uncertain about how a specific situation should be handled, please do not hesitate to contact one of our experts in dispute resolution.