Common Causes of Business Disputes and How to Avoid Them

Running a business is rewarding, but it’s not without its challenges! One of the biggest risks is when a disagreement turns into a legal dispute. These can be costly, time-consuming, and damaging.  

That’s especially true in close-knit communities where relationships matter.

At Treadwell Gordon, we work with businesses across the region to help prevent disputes before they start. Here are some of the most common causes we see, along with practical steps to stay ahead of them.

1. Misunderstood Contracts

Contracts are the foundation of most business relationships. Whether it’s with suppliers, customers, contractors, or staff, unclear or undocumented terms can lead to confusion and conflict.

A common example: A handshake deal over supply terms later leads to disagreement about delivery times, payment dates, or product quality.

How to avoid it:

• Put every agreement in writing.

• Continue to document any changes or other decisions reached as the deal progresses.  

• Don’t assume that the other party has the same understanding about an issue as you do.  

• Use plain language so everyone knows where they stand.

• Get contracts reviewed by a lawyer to identify any gaps or risks.

2. Partnership Breakdowns

Business partnerships often begin with trust and enthusiasm. But if roles, responsibilities, or profit-sharing arrangements aren’t clearly defined, things can unravel. Life changes, such as retirement or a partner wanting to exit, can also trigger tension.

How to avoid it:

• Put a clear partnership or shareholder agreement in place from the start.  

• Agree on what happens if someone wants to leave, sell their share, or wind up the business.

• Review your agreements regularly to reflect business growth or changes.

3. Debt Collection Disputes

One of the most common causes of tension in business is not being paid for the work you’ve done. Unpaid invoices can quickly affect cash flow and, if left unchecked, put your business at risk.

How to avoid it:

• Put clear payment terms in your contracts, including the right to charge interest and recover legal costs.

• Consider asking for security or personal guarantees for larger contracts.

• Do basic solvency or asset checks on new clients before extending credit.

• Act early if payments are delayed - recovery is easier before other creditors step in.

Taking a Proactive Approach

Disputes don’t just drain resources. They distract you from running your business. The good news is that most issues can be avoided with forward planning, clear communication, and solid legal documents.

At Treadwell Gordon, we help rural and regional businesses protect what they’ve built. Whether it’s reviewing contracts, setting up partnership agreements, or safeguarding your intellectual property, we’re here to help you stay on the front foot.

If you’re unsure about where your business might be exposed, or you’d like to get ahead of potential risks, talk to us early. The sooner you act, the more options you’ll have. And the easier it is to keep things on track.