Merchant Advance Blog

Blog Article: Legal Disputes Challenge Small Businesses

Conflicts and disputes are best avoided in any interpersonal context, but in the small business space they do occasionally crop up. Settling bills, coming to the right terms with suppliers, dealing with damages, or even addressing customer complaints: these issues, if unresolved, may end up becoming legal matters that need to be dealt with an official capacity.

A judge's gavel used in courtrooms when settling legal disputes

A new Ipsos poll on behalf of DAS Canada shows that 30% of Canadian small businesses have had to deal with legal disputes in the past three years. These disputes were shown to have a measurable impact on the success of the businesses in question. 72% of business owners polled said that a legal dispute would cause a moderate or large strain on their business.

Legal proceedings are not only a distraction from the logistical and managerial responsibilities that go into running a small business: they can also constitute a significant expenditure of money and time. Perhaps most troubling among the poll’s conclusions is that one in ten (12%) business owners say they personally know another business owner who has lost their business due to lawyer’s fees and related costs required to settle a legal dispute.

The top three sources of conflict leading to legal disputes, as polled by Ipsos, were:

  1. Collecting money owed by customers
  2. Contract disputes with customers
  3. Contract disputes with suppliers

Though we are not in a position to offer legal advice of any kind, your small business can take certain steps to avoid these detrimental disputes by setting out terms of contracts and purchase/sale orders clearly and well in advance. If you can, have signatures on contracts authorized by a notary public. Well-executed contracts are worth your time and careful attention. If a dispute arises, take time to reflect and get good legal advice before you commit to a course of action from which you can’t turn back.

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