What Can Make Mediation a Better Option Than Litigation?
For Many Dispute Situations, Including Troubled Business Relations, Mediation Offers the Parties In Dispute An Opportunity to Resolve Issues Without the Publicly Visible, High Cost, and Lengthy, Litigation Route. Additionally, Mediation Helps to Avoid Contentious Litigation That Destroys Business Relations.
Obtaining Mediation Services May Avoid the Contentiousness of Litigation and Help to Maintain a Positive Business Relationship
The mediation process involves a professionally trained neutral mediator who is highly skilled in helping to keep the contentiousness of disputes to a minimum, helping the parties to a dispute view the issues objectively, and helping the parties to find a win-win resolution that, in many situations, also helps the parties to continue what was otherwise a troubled relationship.
What Is the Role of a Mediator?
The role of a mediator is to assist parties involved in a dispute to engage in a constructive dialogue with the intent that a resolution to the dispute may result. Unlike an adjudicator within a court setting or other form of litigative process, a mediator encourages problem-solving and exploratory brainstorming within a process that aims to avoid the contentiousness and adversarial nature of the litigative process. Parties are encouraged to discuss ideas that enable a satisfactory resolution to the dispute rather than engaging in the litigative process that requires the effort of proving the other guy did something wrong - which may lead to an adjudicated solution to the dispute; but, also likely leads to the dissolving of the relationship.
In What Business Dispute Situations Is Mediation Helpful?
The mediation process is available and may be beneficial in almost any circumstances where a dispute, conflict, or even awkward tensions, exist. In business disputes, the mediation process is especially helpful where the parties in dispute prefer to maintain a positive business relationship. Examples of common concerns that may be mediated include, among other issues:
- The disagreement regarding contract interpretations;
- The failure of payment and negotiation of a payment arrangement;
- The failure to meet deadlines or other performance expectations;
- The differences in opinion on quality of goods or quality of services rendered;
- The partnership and management disputes involving business direction decisions; and
- The conflicts alleging oppression of directors, shareholders, or other stakeholders.
As mentioned above, mediation may be especially helpful for situations where the dispute involves parties needing to maintain a positive relationship such as when a dispute arises between business partners, between a business and a key supplier or other important party where further or future reliance is required by the business. Essentially, mediation helps the relationship rather than hurts the relationship.
Although mediation process is a collaborative effort, the parties to the dispute may, and often should, retain independent legal counsel to attend, and to participate within, the mediation process by helping each party to articulate and elaborate upon the concerns and position of each party as well as to help ensure that applicable legal rights and entitlements are protected. Furthermore, whereas any agreement achieved within the mediation process must be reviewed by the respective legal representatives prior to any agreement being executed by the parties.
Offering Mediation As a Dispute Resolution Process
For an effective mediation process to take place, participation is best kept voluntary; however, business contracts do sometimes state that prior to commencing litigation, a disputant must first avail to the mediation process. For the best likelihood of a mediated settlement, and without aggravating a relationship that is strained, initiation of the mediation process is best done early before disputes fester. When offering to use the mediation process, a party to the business dispute should advise that, among other things:
- The mediation process is a voluntary option and remains voluntary whereas participants may choose to withdraw from mediation at any time;
- The mediation process is confidential and the information discussed during the mediation will be kept private and remain confidential;
- The mediation process purpose is to encourage constructive communication for the benefit of resolving conflict with the ultimate goal of helping to maintain a healthy business relationship;
- The mediation process is independent of any litigation process and may help to avoid litigation or settle any already commenced litigation; and
- The mediator may be available for an independent advance discussion for the purpose of explaining how the process works so to help reduce any reluctance or hestitation and to enable parties the opportunity to make a better informed decision on whether to mediate.
What Are the Roles of the Parties During the Mediation?
The parties in dispute are the primary participants within the mediation process. Unlike the litigation process where the parties, as disputants, are often limited to appearing only as witnesses that testify to facts that are thereafter included within legal arguments made by the legal representatives and decided upon by a judge or an adjudicator, the discussions and the decisions are that of the disputants.
Just the same as the litigative process, parties in dispute mediate by sharing a respective version of the story about what happened and what the conflict is about while also remaining openmindedly ready to listen and hear out the viewpoints and concerns of the other party. In this way, both parties - or all parties in a multiple party mediation - receive an inviting forum within which to air concerns and then to explore ideas for solving the conflict in hope of achieving a negotiated agreement that is satisfactory to all parties.
The role of the mediator is to listen to the parties while acting as a guide for the clarification of the issues and as a guide for the exploration of ideas that may help solve the conflict. The mediator also assists in the formation of a dispute resolving settlement agreement.
How Long Does the Mediation Last?
The mediation process is scheduled for a minimum of three hours and additional time may be scheduled as necessary. Generally, the three-hour mediation session provides the disputing parties with enough time to express respective views and concerns regarding the issues and conflicting positions as well as to explore the potential solutions that may resolve the conflict. The three-hour session is also scheduled with an expectation that breaks will be necessary.
The mediation process is conducted with the understanding that the process is strictly confidential and the information discussed during the mediation process shall stay confidential with only few exceptions such as where a child is at risk of harm, where a person is in imminent danger, or where a judge orders disclosure of information.
Prior to a mediation session being commenced, all parties to the mediation, including the mediator, are required to agree to the strict confidentiality requirement and to appreciate that doing so enables the candid discussions necessary for a constructive mediation process. The mediation process requires a candid discussion about the disputes issues, the sharing of settlement positions, the understanding of relevant law, if applicable, among other concerns.
All parties and attendees such as the legal representatives for the parties, must respect the confidentiality of the mediation process and must agree to refrain from the disclosure of any information arising out of the mediation process discussions; and accordingly, all parties and attendees must commit to the terms of confidentiality by signing a confidentiality agreement prior to the start of a mediation session.
During the mediation process, it is common that a party will want to discuss concerns independently with the mediator. An independent discussion where a party meets one-on-one with the mediator is known as a caucus.
The mediator is required to keep details shared within a caucus confidential without disclosing details of the caucus discussion to the other party; and accordingly, the mediator will refrain from doing so unless express permission from the party to whom the duty of confidentiality is owed is received by the mediator.
What Happens When the Parties Find a Solution?
When the mediation process successfully results in a solution to the dispute, the mediator will assist the parties with the drafting of a settlement agreement. The settlement agreement will formulate a binding contract that is legally enforceable; and accordingly, before the parties finalize the settlement agreement with signatures, the parties are required to ensure that the agreement is fully satisfactory. Generally, prior to obtaining signatures, the mediator will require the parties to obtain independent legal advice from a lawyer or a paralegal prior to signing the settlement agreement. The settlement agreement will usually also include a term stating that the parties did, or were provided with the opportunity to, receive independent legal advice.
Do Settlement Terms Need to Comply With Legal Requirements?
Business disputes often relate to legal issues and may be governed by legislated statute law or common law jurisprudence from the past precedent decisions of judges. In some circumstances, the terms of a mediated settlement agreement must comply with the relevant law; and accordingly, the mediator will, as stated above, require the parties to obtain legal advice before executing a settlement agreement. For information about the law applicable to issues often arising in business disputes, see the various page links provided below.
The Potentially Relevant Business Law
After negotiations, if the essential terms are incomplete despite purported acceptance of a 'deal', then the parties have merely agreed to agree rather than...Learn More
Matters involved in the trade of debts may include overdue credit accounts, private lending, bank loans, among many things. Essentially, anytime a person...Learn More
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Breach of confidence involves the wrongful use of information that was openly shared with the party that subsequently misuses the secret information.Learn More
Are Contract Terms Voided If Contract Parties Ignore the Contract Terms? Where Contract Terms Are Ignored By the Contract Parties the Right to Enforce the...Learn More
When a contract contains an explicit expiry date, the contract may be implicitly extended or renewed by the conduct of the parties that shows disregard to the...Learn More
Contra proferentem is a rule of contract interpretation that says ambiguous or conflicting terms within a contract should, generally, be construed against the...Learn More
There are various form of breach of contract. Each form of breach of contract has unique criteria. Available legal remedies for the various forms of breach...Learn More
A deal that is only a deal to agree to agree is legally unenforceable; however, a deal that is a contract to contract is legal enforceable.Learn More
The tort of conversion involves improper interference with the rights of ownership or rights of possession of an object, whether a tangible or intangible...Learn More
Incorrect information reported to a credit bureau may result in liability for the reporter of the incorrect information within a legal case framed as a form of...Learn More
If a Person Lies While Making a Deal Can the Naive Person Be Blamed For Believing the Lie? The Tort of Deceit Occurs When a Person Knowingly or Recklessly...Learn More
Delaying issuance of invoices may result in the loss of right to sue for unpaid accounts. Reasonably prompt issuance of an invoice is necessary to avoid...Learn More
Business owners often attempt to encourage prompt payment by imposing delayed payment penalties (late fees) upon those who fail to pay on time.Learn More
The world of business and commerce requires pricing flexibility within contractual relationships whereas circumstances are often such that an appropriate final...Learn More
Parties are forbidden from engaging in deceptive practices when negotiating contracts as well as when performing contracts and are required to correct known...Learn More
When a contract contains terms, conditions, or clauses, requiring performance of an impossibility, the requirement to do so is a nullity.Learn More
Injurious falsehood involves harmful and untruthful statements about a business or property of a person unlike defamation which involves untruthful statements...Learn More
The torts of intentional interference in contractual relations and intentional interference in economic relations are viewed as business torts involving poor...Learn More
When reviewing a contract for interpretation purposes, the law considers the intention of the parties to the contract rather than just the expressly written...Learn More
Basic contract law principles require that the object and purpose and terms of a contract be lawful and moral if the courts are to uphold and enforce the...Learn More
A liability waiver, when genuinely agreed to, remains very limited and applicable only to those risks willingly assumed. Generally, a waiver is also unable to...Learn More
Often businesses will attempt to impose a 'limited liability clause' within contractual agreements. To the party against whom such a clause is against, such a...Learn More
Negligence matters are among the most common torts that give rise to litigation claims (lawsuits) and often involve injury to persons or damage to property...Learn More
What Happens When a Contract Lacks Clarity On Terms That Are Necessary to Give a Contract a Reasonably Meaning? When a Contract Lacks Certain Details a...Learn More
Contract clauses that contain especially harsh terms must explicitly and clearly be pointed out or courts may deem the clause as an onerous term and deemed...Learn More
The parol evidence rule states that where a written contract exists and such contains a complete express term, evidence and argument that the term is altered...Learn More
The tort of passing off involves the intentional or unintentional infringement upon the name, style, colour, brand, or other identifying means of another...Learn More
In Ontario, the right to sue for breach of privacy continues to evolve. Included within the umbrella of breach of privacy issues is the tort known as...Learn More
Most small businesses are owned and operated by the shareholders. Indeed, in many incorporated small businesses the shareholders are also the officers,...Learn More
A Helpful Guide to Understanding That Employees Are Without Personal Liability Protection for Negligent Conduct Occurring While Acting For a Corporate...Learn More
Liability protections usually available for owners of an incorporated business may be lost without properly holding out and identifying the corporate identity...Learn More
When a party to a contract indicates an intention to disregard terms within a contract, such conduct may be deemed a repudiation of the contract which may...Learn More
Generally, when a debt is owed, the creditor has two years to start a lawsuit from the time the debt became overdue; however, certain conduct of the debtor can...Learn More
When a person signs a contract carelessly without reading the contract and without any improper conduct by the other party to the contract, generally, the...Learn More
Slander of title of property occurs when statements or documents, including documents usual to a legal process, such as liens or encumberances, are improperly...Learn More
A contract that lacks detail or terms on a specific concern may be interpreted using an objective review of the surrounding circumstances that existed when the...Learn More
The tort of detinue is related to the tort of conversion and involves the failure to return an object to the person whom is the rightful owner or having proper...Learn More